Delays depress Boeing’s profit

Delays hurt Boeing Co.’s second-quarter profit, which fell 19% because of late delivery of military aircraft and rising costs from the postponed introduction of its 787 jetliner.

But the Chicago-based company, the world’s second-largest commercial airplane maker after Europe’s Airbus, reaffirmed its forecasts for 2008 and 2009, saying productivity gains would overcome the quarter’s setbacks.

Shares of Boeing tumbled nearly 4% after the company reported its earnings.

Boeing posted profit of $852 million, or $1.16 a share, for the three months that ended June 30, compared with $1.05 billion, or $1.35 a share, a year earlier.

Revenue remained essentially flat at $17 billion.

Analysts polled by Thomson Financial, on average, expected profit of $1.23 a share on revenue of $17.24 billion.

The results included a previously disclosed charge of $248 million for Boeing’s Airborne Early Warning & Control program due to delays in delivering six military aircraft to Australia. It said annual gains would offset the charge.

Lower commercial airplane profit also cut into overall results

Boeing’s commercial airplane business reported a 19% decline in quarterly earnings from operations, to $777 million from $960 million last year, because of its customer and model mix, expense timing and costs tied to its long-delayed 787.

Quarterly revenue for the unit fell 2% to $8.57 billion from $8.71 billion.

The company said that 787 production was following a revised schedule announced in April, and that the program was in the final stages of assembling the first airplane in preparation for a test flight.

In a call with analysts and reporters, Boeing’s chairman, president and chief executive, Jim McNerney, said that “the plane will be flying in the fourth quarter,” and that assembly and testing were on schedule or ahead of schedule.

“The structural assembly of the plane is largely complete,” McNerney said. “There are some systems installations yet to be done.”

Fifty-eight airline customers have placed 896 orders for the much-anticipated 787.

Looking ahead, Boeing reaffirmed its earnings outlook for 2008 and 2009 and said its backlog of airplane orders rose 6% to a record $346 billion.

“We remain confident we will deliver the airplanes in our guidance for 2008 and 2009, and that deliveries will be higher in 2010 due to 787 deliveries ramping up,” McNerney said.

Boeing backed its 2008 earnings guidance of between $5.70 and $5.85 a share and its 2009 guidance of $6.80 to $7 a share.

Paul Nisbet, an analyst with JSA Research, said the quarterly results were “poor, surprisingly so.”

“The company didn’t telegraph anything that would have led us to believe that the costs were going to go up for the infrastructure for the complete commercial airplane operation because of the delay of the 787s,” he said in an interview. “And I think they were remiss in not doing that,” Nisbet said. “That was the only real surprise.”

Boeing’s stock dropped $2.54, or about 3.7%, to $66.72.