Boeing Co., the No. 2 commercial airplane maker behind Airbus SAS, said Wednesday its third-quarter earnings fell 31 percent, hurt by a hefty charge for pulling the plug on in-flight Internet service Connexion.
Higher jet sales helped the company’s revenues jump 19 percent, and it raised its guidance for 2007 earnings and revenue. But the company said its 787 jet program is coming under increasing pressure concerning weight and supplier-related issues and it will have to spend more on research and development for the plane, due out in 2008.
“We are at that point in the program where weight remains a dogged issue,” Chairman and CEO Jim McNerney said on a conference call. “We are trying to witch-hunt the issues in this program right now. ... This plane will be done on time and within contractual commitments.”
Net earnings for the July-through-September period were $694 million, or 89 cents per share, down from $1.01 billion, or $1.26 per share, a year earlier.
Results included a charge of $280 million, or 22 cents per share, to exit the Connexion business and also suffered by comparison to a year ago when the company reaped 93 cents a share in gains from tax benefits and asset sales.
Revenues rose to $14.7 billion from $12.4 billion, bolstered by a 45 percent jump in commercial airplane sales.
Analysts surveyed by Thomson Financial had expected, on average, profit of 63 cents per share on revenue of $15.07 billion.
Boeing increased its estimate for 2007 earnings by 20 cents per share to between $4.45 and $4.65, citing the discontinuation of its Connexion investment, contributions from its recent $1.7 billion acquisition of aircraft spare parts distributor Aviall Inc. and additional performance improvements.
It also raised its forecast for 2007 revenue to $65.5 billion to $66 billion, up from the previous guidance of $64.5 billion to $65.5 billion.
Buoyed by the strong reception for its more fuel-efficient 787 jet, Boeing has more than tripled the number of orders won by Airbus so far this year after five straight years finishing as the runner-up. The Chicago-based aerospace company has benefited from the struggles of its European rival, which recently announced a second year of delays with its A380 superjumbo.
The company’s Seattle-based Boeing Commercial Airplanes unit more than doubled its operating earnings for the quarter, to $646 million, and its operating margin climbed to 9.7 percent from 5.1 percent. Its revenues rose to $6.7 billion from $4.6 billion as the company delivered 100 airplanes in the quarter, its highest total since 2002 and up from 62 a year ago.
The company reiterated its expectation to deliver 395 commercial planes in 2006, up 36 percent from last year, and 440 to 445 in 2007.
Boeing said its backlog grew to a record $229 billion, up 4 percent from the end of the second quarter, amid strong momentum for its commercial jets. It said the 787 has won 432 firm orders from 34 customers.
The defense business registered operating earnings of $879 million, down 33 percent from a year ago when it had a $569 million gain from the sale of the Rocketdyne business. The operating margin for the St. Louis-based business increased to 11.3 percent from 9.9 percent excluding the Rocketdyne gain, and its revenue increased 4 percent to $7.8 billion.
For the first nine months of 2006, Boeing’s net income was $1.2 billion, or $1.57 per share, down 42 percent from $2.1 billion, or $2.62 per share, a year earlier. Revenues were $44 billion, an 11 percent increase from $39.7 billion.