Boeing raises full-year profit forecast

Planemaker reaps gains from faster production that is driving jetliner deliveries to record levels

The cockpit of the new Boeing 747-8 Intercontinental jumbo jet is assembled at the company’s manufacturing facility in Everett, Washington. Photo: Bloomberg

The cockpit of the new Boeing 747-8 Intercontinental jumbo jet is assembled at the company’s manufacturing facility in Everett, Washington. Photo: Bloomberg

Wed, Jul 23, 2014, 15:08

Boeing raised its full-year profit forecast as the world’s biggest planemaker reaps gains from faster production that is driving jetliner deliveries to record levels.

Earnings for 2014 excluding some pension expenses will be in a range of $7.90 to $8.10 a share, Chicago-based Boeing said today, compared with a previous projection for $7.15 to $7.35.

The results show the commercial airplane unit operating in high gear on existing airliner programs as the company nears the introduction of upgraded single- and twin-aisle models later this decade, said Howard Rubel, a Jefferies analyst in New York.

The quarter was “tarnished” by a $272 million after-tax cost for development of the KC-46A military tanker, Rubel said.

“It’s not perfect, but on balance you have to read the release as positive,” Mr Rubel said by telephone.

“The company seems to be spending to keep the program on schedule as opposed to making excuses for why it’s going to slide.” Boeing fell 0.6 per cent to $129 at 9.07am before regular New York trading.

The stock slid 4.9 per cent this year through yesterday, the second-biggest drop among the 30 companies on the Dow Jones Industrial Average.

“We think investors will look through this and note a couple of things,” Rob Stallard, a New York-based aerospace analyst with RBC Capital Markets, said in a note to clients today.

He said “the most obvious” issue is the costs related to the tanker, which is derived from Boeing’s 767 jetliner. “It is worrying that Boeing is booking a charge of this magnitude at a relatively early stage in this long-term program, particularly given recent assurances from management that everything was going to plan,” Stallard wrote.

He rates Boeing as sector perform, while Rubel’s recommendation is buy.

Boeing expects to recover the losses over a contract to deliver 179 tankers to the US military by 2027, Chris Chadwick, who heads the defense unit, told reporters in a July 13 briefing ahead of the Farnborough Air Show in England.

The company handed over 181 commercial jets to customers last quarter, the most ever.

Sales increased 1 per cent to $22 billion, trailing the $23 billion projected by analysts.

Revenue in the commercial business rose 5 per cent to $14.3 billion and slid 5.4 percent to $7.75 billion in Boeing’s defense operations as the US government pares military spending.

Bloomberg