EARNINGS : Transport Unit Behind McDonnell Gain

McDonnell Douglas Corp., citing improved performance of its transport aircraft division, said Thursday that its second-quarter earnings rose 35%.

The aircraft and aerospace company said it earned $77 million, or $2.01 a share, up from $57 million, or $1.49 a share, in the same period of 1990.

Sales for the quarter rose 22% to $5.04 billion from $4.12 billion.

Thursday’s sunny earnings report contrasts with a number of events this year that have clouded the corporation’s outlook.

Only a day earlier, defense officials told Congress that the firm faced such a severe cash crunch early this year that it sought a $1-billion advance from the Pentagon. The request, which was denied, followed the January cancellation of the Navy’s A-12 Stealth fighter program.

McDonnell’s transport aircraft division, which builds commercial jets and is developing the giant C-17 military cargo plane, posted its third profitable quarter in a row, with operating earnings of $34 million. That compared to a loss of $33 million in the same quarter last year.

McDonnell Douglas has had problems with the C-17, being built in Long Beach. In May, the Air Force told the corporation to fix several design and production deficiencies with the plane.

McDonnell Douglas delivered nine of its new MD-11 tri-jets in the second quarter of this year. It also delivered 37 MD-80 twin jets this quarter, compared to 34 in the same quarter last year.

“The fact that they’re beginning to show a profit is certainly encouraging, given that they’ve invested so much in the MD-11 program and lost money on the C-17,” said Paul Nisbet, an analyst with Prudential Bache Securities in New York.

The cargo jet “looks like it’ll be flying next month. That’ll be another milestone that will be beneficial to them,” Nisbet said.