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Boeing profit up despite Dreamliner issues

Boeing Co. rode continued momentum from its commercial airplane business to a 4 percent increase in fourth-quarter profits Wednesday, topping Wall Street’s expectations.
/ Source: The Associated Press

Boeing Co. rode continued momentum from its commercial airplane business to a 4 percent increase in fourth-quarter profits Wednesday, topping Wall Street’s expectations despite ongoing concerns over delays in its 787 Dreamliner program.

The world’s second-largest commercial jet maker said it continues to address problems in assembling the first 787s and slightly reduced its estimate for both 2008 revenue and deliveries because of the previously announced glitches. It said it remains on the revised schedule announced earlier this month.

Boeing shares, which had fallen 30 percent since last fall amid 787-related concerns, rose 92 cents to $81.88 in morning trading after initially dipping lower.

Net income for the last three months of 2007 was $1.03 billion, or $1.36 per share, up from $989 million, or $1.29 per share, in the fourth quarter of 2006. That was 4 cents per share better than the consensus estimate of analysts polled by Thomson Financial.

Revenue was $17.5 billion, flat with a year earlier but slightly above analysts’ forecast of $17.3 billion.

The company increased its guidance for 2008 earnings per share to between $5.70 and $5.85 from an earlier range of $5.55 to $5.75, still short of the Wall Street consensus estimate of $5.95. It also lowered its estimate of 2008 revenue by $500 million, to a range of $67 billion to $68 billion, due to the 787 delay.

Boeing’s continued resurgence in the quarter was led by its Seattle-based commercial airplane manufacturing business, where operating earnings increased 46 percent to $973 million and revenue jumped 17 percent to $8.9 billion. Deliveries rose 9 percent to 112 and the record backlog grew 46 percent to $255 billion, reflecting strong demand for the 787 and other planes.

The Chicago-based company closed the gap on Airbus in aircraft deliveries but still ended the year trailing its European rival for a fifth straight year, 453 to 441, while outpacing it in orders. It scaled back its estimate of 2008 deliveries to between 475 and 480, down from 480 to 490, to reflect the rescheduling of initial 787 deliveries into 2009.

The unit’s continued success depends on how quickly Boeing can untangle snags in the 787 program. Boeing said Jan. 16 it would push back the 787’s inaugural flight until the end of the second quarter due to supply chain problems and slow progress on the assembly line, with the first delivery not expected until early 2009.

Chief Executive Jim McNerney alluded to the unresolved 787 issues but did not elaborate in the company’s earnings statement. “Despite some development program challenges, we are a strong company growing stronger and we expect continued improvement in our financial results in 2008 and beyond,” he said.

Analyst Paul Nisbet of JSA Research said the 787’s status won’t be fully known until the company succeeds in “powering up” or turning on the aircraft and its 92 electronic systems. That event was pushed back two weeks ago until early in the second quarter.

Despite the 787 concerns, Nisbet said: “It was a strong quarter. They’ve been just knocking the cover off the ball as far as orders, with 520 for the quarter, and with a (companywide) backlog of $327 billion. Those are just unheard-of numbers.”

The company’s St. Louis-based military contracting business saw earnings from operations decline 5 percent to $978 million and revenue fall 14 percent to $8.6 billion. The revenue drop was largely because results from a year earlier included two months of revenue from its Delta IV family of rockets, which are now part of United Launch Alliance, a joint venture with Lockheed Martin Corp.

Boeing had full-year earnings of $4.1 billion, or $5.28 per share, up 84 percent from $2.2 billion, or $2.85 per share, in 2006. Revenue climbed 8 percent to $66.4 billion from $61.5 billion.