Posted on: Thursday, February 3, 2005
Boeing's profit falls, but optimism rises
By Dave Carpenter
Associated Press
CHICAGO — Boeing Co.'s fourth-quarter earnings sank 84 percent, but the aerospace giant impressed Wall Street yesterday by forecasting a big jump in commercial airplane deliveries next year, reflecting a resurgent market and its own improved prospects against Airbus.
Associated Press file photo But analysts and investors cheered the company's outlook for a long-awaited upturn in the airplane market and the estimate it will deliver between 375 and 385 airplanes in 2006 — up as much as 20 percent from this year's projected 320.
Adding to the optimism is the recent flurry of orders for Boeing's new 787 jet, which is due to go into service in 2008. Chinese airlines committed Friday to 60 orders for the fuel-efficient jetliner, formerly dubbed the 7E7, giving the company 186 orders and commitments.
Boeing shares, which rose 23 percent last year, increased $1.19, or 2.3 percent, to close at $52.23 on the New York Stock Exchange.
A comeback in commercial airplanes and a continuing strong defense business would again give the company a strong 1-2 punch after all the post-2001 upheaval in aviation.
Defense generated $30 billion in sales for the year, increasing its share of company revenue to 57 percent.
Analyst Richard Aboulafia of the Fairfax, Va.-based Teal Group said the results underscore that Chicago-based Boeing has endured two years of turmoil and turnover yet remained in top financial shape.
"Despite the ethics scandal, the management troubles and the lost opportunity of the tanker, they're still in very good shape with what matters to Wall Street: booking business and cash flow," he said.
Boeing CEO Harry Stonecipher said the improved outlook for airplanes can be attributed largely to increased demand for Boeing's 737s and 777s, with the 787 also drumming up more interest.
Both Boeing and France's Airbus, which anticipates more than 400 airplane deliveries in 2006, now count on seeing a big payoff from an airline industry comeback that saw global passenger traffic rise almost 10 percent last year.
Net earnings for Boeing's October-through-December period amounted to $186 million, or 23 cents per share, down from $1.13 billion, or $1.40 per share, a year earlier. Analysts surveyed by First Call had estimated earnings at 5 cents per share.
Revenues increased 1 percent to $13.3 billion from $13.2 billion.
Heavy charges for ending production of its 717 jet and writing off a controversial lost Pentagon contract for air tankers contributed to the drop to $186 million profit from $1.13 billion a year earlier, when a billion-dollar tax refund inflated results. Boeing also lost money from its commercial airplane business in the quarter on lower sales and plane deliveries.
Boeing ended production of its 717 jet last year. The shutdown is cited as a key reason Boeing's fourth-quarter profit fell 84 percent.
