Boeing being dragged down by sinking airlines

By Peter Robison
Bloomberg News Service

CHICAGO — Boeing Co., hobbled by the airline industry's record losses, said third-quarter profit fell 43 percent and reduced its forecasts for sales, profit and aircraft deliveries.

Net income at the world's biggest planemaker dropped to $372 million, or 46 cents a share, as deliveries slipped and it wrote-down aircraft leased to money-losing carriers. Sales fell to $12.7 billion from $13.7 billion, Boeing said in a statement.

The company also plans to take a fourth-quarter charge of as much as $4 billion to cover the declining value of its pension-plan investments. It was the fourth consecutive decline in quarterly earnings for Boeing and Chief Executive Phil Condit, whose plan to expand into new defense markets has been overshadowed by the drop in jetliner demand.

"So go the airlines, so goes Boeing," said Rich Turgeon, an analyst with KeyCorp's Victory Capital Management, which owns 2 million Boeing shares among $70 billion in assets. "The environment for air travel is a lot worse than what even the most pessimistic forecasts suggested."

AMR Corp.'s American Airlines said yesterday its third-quarter loss widened to $924 million and it will delay more deliveries, taking fewer Boeing planes next year and none the following two years. UAL Corp.'s United Airlines has said it may join US Airways Group Inc. in filing for bankruptcy, forcing Boeing to raise reserves for bad debt and contributing to $158 million in write-downs during the quarter.

The Chicago-based company expects to deliver 275 to 285 airplanes next year, paring its previous forecast for as many as 300 airplanes. Deliveries in 2004 will be about the same, the company said, without being specific. Boeing had forecast an increase in 2004.