Boeing says first-quarter profit soars
In a rare bright spot in an otherwise downbeat corporate earnings season, Boeing Co. said Wednesday that first-quarter profit jumped 38% to $1.2 billion on strong commercial aircraft sales and predicted that orders for passenger jets were likely to continue at a robust pace despite the financial woes of U.S. airlines.
The earnings beat analysts’ expectations and fueled a rally in Boeing shares, which rose $3.53, or 4.5%, to $82.09.
“You can’t do much better than that,” said Paul H. Nisbet, an aerospace analyst for JSA Research Inc.
Revenue for Chicago-based Boeing’s defense unit, the largest private employer in Southern California, fell slightly but earnings rose thanks to lower expenses. The unit, Integrated Defense Systems, accounts for about half of the company’s revenue and employs 31,000 workers in the region.
In a conference call with analysts, Boeing Chief Executive Jim McNerney said global demand for commercial airplanes remained strong and predicted that record fuel prices could push airlines to accelerate plans to replace aging, gas-guzzling aircraft.
McNerney said the company was monitoring the financial woes of domestic airlines, but the gloomy economic outlook had not affected aircraft sales so far. He said about 11% of the aircraft orders were from U.S. customers and that the world’s largest aerospace company had enough orders to keep production rolling for nearly six years.
With the exception of Southwest Airlines, which posted a small profit, all the major airlines were hit hard by fuel costs and reported losses of hundreds of millions of dollars in the first quarter.
“Right now these developments are not having significant impact on us,” McNerney said.
Boeing’s defense business is also “fairly well insulated against the recent economic volatility,” he said. “If there is a more significant economic downturn, I believe Boeing is in a good position to weather it.”
The company said first-quarter net income climbed to $1.2 billion, or $1.62 a share, compared with $877 million, or $1.13, a year earlier. Analysts anticipated $1.35 a share.
Revenue rose 4% to $16 billion from $15.37 billion last year.
In its commercial aircraft unit, Boeing said it delivered 115 planes and took 289 jet orders in the quarter. Revenue climbed 8% to $8.2 billion from $7.6 billion. Earning from operations, which excludes taxes, rose nearly 40% to $983 million from $706 million.
Defense revenue slipped 2% to $7.6 billion from $7.7 billion on fewer deliveries of military aircraft and commercial satellites, but operating earnings rose 10% to $860 million as the company cut expenses.
McNerney said Boeing was looking forward to a decision this summer on its appeal of a $40-billion contract awarded to rival Northrop Grumman Corp. to build aerial refueling tankers for the Air Force.
But he said “growth prospects for the company and for [Integrated Defense Systems] remain solid, regardless of the tanker outcome.”
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