Backlogged plane orders boost Boeing profits

MINNEAPOLIS – Boeing Co. surprised investors with a bigger-than-expected fourth-quarter profit on Wednesday and said testing of its two newest planes is on track.

Boeing also said it won’t scale back aircraft production, which some had feared. Its guidance for 2010 profits was less than analysts had expected, but investors didn’t seem to mind. Boeing shares rose $3.21, or 5.6 percent, to $60.92 in afternoon trading.

Boeing’s backlog of airplane orders is carrying it through a steep downturn in airline traffic, which has made carriers much more conservative about ordering new planes. Airlines order jets years before delivery, so Boeing can keep building new planes to fill old orders, even if new orders slow. Boeing expects to build more planes than it takes new orders for in 2010 – as it did in 2009 – said Jim McNerney, Boeing’s chairman, president and CEO, on a conference call with analysts.

Airlines have struggled during the recession, and aircraft orders have fallen. The International Air Transport Association said Wednesday that airlines saw passenger demand drop 3.5 percent, the worst falloff the industry has recorded.

Boeing and European rival Airbus dominate the market for large commercial jets. Last year Airbus delivered 498 planes versus 481 for Boeing.

Boeing’s new 787 flew for the first time last month, and flight testing is under way on the first two planes. Referring to the flight tests, McNerney said, “So far, so good.”

Boeing said it plans to fly its new 747-8 “in the near future.” The new version of its 41-year-old plane is longer and can fly farther than its predecessors. It plans to deliver a handful of both the new 747 and the 787 by the end of this year.

Boeing made a profit of $1.27 billion in the fourth quarter, reversing an $86 million loss from a year ago. The per-share profit of $1.75 was ahead of analyst expectations as measured by Thomson Reuters. Revenue rose 42 percent to $17.94 billion. Results in last year’s fourth quarter had been held down by a strike and a charge for delays on the 747-8.