Image: All Nippon Airways' Boeing 787 Dreamliner
Issei Kato  /  Reuters
All Nippon Airways' Boeing 787 Dreamliner aircraft prepares to take off on the model's first commercial flight Wednesday from Narita airport near Tokyo. Boeing has cut its 2012 delivery forecast on its two newest models.
msnbc.com news services
updated 10/26/2011 10:33:41 AM ET 2011-10-26T14:33:41

Boeing Co. cut its forecast for deliveries of its two newest jets on Wednesday, even as it reported a $1.1 billion third-quarter profit that was well above expectations.

Boeing now says it will deliver 15 to 20 of its new 787s and 747-8s this year. That's 10 fewer than Boeing's previous estimates. It also said that two-thirds of those deliveries will be the 747-8s. It didn't say why the delivery forecast was cut.

The two jets have been years in the making, and Boeing delivered the first of each of them in recent weeks. The 787 carried its first passengers on Wednesday on a flight by Japan's All Nippon Airways.

Investors chose to focus on the strong quarterly results. Shares rose nearly 4 percent as Boeing said it earned $1.1 billion for the quarter ended Sept. 30, up 31 percent from its net income of $837 million during the same period last year. The profit of $1.46 per share was far above the $1.10 per share expected by analysts surveyed by FactSet. The company has easily surpassed Wall Street's profit expectations in each of the first three quarters this year.

Boeing earned $1.12 per share in last year's third quarter.

Revenue rose 4 percent to $17.73 billion. Analysts had been expecting $17.79 billion.

Boeing raised its full-year guidance to $4.30 to $4.40 per share from $3.90 to $4.10 per share.

Boeing said its initial accounting block for the 787 is 1,100 planes, which is the number it either has sold or expects to sell. It will average out production costs across those 1,100 planes. That avoids a situation where Boeing would have to account for losing money on early, slowly-built planes when it was still learning how to make them efficiently.

Roughly half of Boeing is its commercial airplanes division. The other half is the defense division, which produced much of the third-quarter profit growth. Defense had operating earnings of $824 million, up 20 percent, even though revenue was flat at $8.2 billion.

Earlier this month, Boeing said it delivered 127 commercial airplanes in the third quarter, including 100 of its best-selling 737 narrowbodies and 21 widebody 777s. The number of deliveries was up slightly from the 124 reported for the year-ago quarter.

Boeing gets paid for its airplanes at delivery. Its commercial airplane delivery guidance for 2011 is now about 480, down from previous guidance of 485 to 495.

The first 787 was delivered to All Nippon Airways last month, capping three years of delays for the development program. The first paying customers rode ANA's Dreamliner to Hong Kong from Tokyo.

Now, analysts want to know if Boeing can ramp up its production rate for the plane to 10 per month by the end of 2013, as promised. The current production rate is two per month.

Analysts also want to know when the 787 program will be profitable. Boeing has taken more than 800 orders for the plane.

Boeing said on Wednesday it would calculate the profitability of the program based on 1,100 planes.

Chief Executive Jim McNerney previously said he expected the program to be profitable from "day one" based on the company's usual accounting practices.

Alex Hamilton, managing director of EarlyBirdCapital, said 1,100 planes is a larger block size than Boeing has used to determine profitability on previous programs, but it is appropriate given the enormous order backlog.

"They're going to be profitable from day one with very small margins," Hamilton said. "It's a little bit of a break from historical precedent, and that's luxury they were given with such a large backlog."

Reuters and The Associated Press contributed to this report.

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