Boeing raises forecast as quarterly profit jumps; defense weak
By Alwyn Scott
(Reuters) - Boeing Co (BA.N: Quote) reported a surprising 12 percent jump in quarterly profit and raised its full-year forecast on soaring commercial aircraft production and margins, sending its shares up as much as 6 percent to an all-time high.
The company also said on Wednesday that it will speed up production of its 787 Dreamliner, a long-awaited move that comes after a series of problems with the new, high-tech plane, and while Boeing is still pushing to improve the jet's reliability.
The strong third-quarter results from the commercial airplane business, which churned out more planes at higher profit margins in the quarter, compensated for weakness in the defense unit, where revenue rose just 3 percent, margins contracted and profit fell.
The commercial aircraft gains showed Boeing was not only on target to deliver a record number of jetliners this year, but was producing them efficiently.
But the optimism was tempered by continuing 787 problems, by the loss of a key order in Japan earlier this month, and by the prospect that profit margins will fall in the current quarter.
"Obviously that's a campaign that we did not want to lose," Boeing Chief Executive Jim McNerney said in a conference call, referring to rival Airbus' EAD.PA win of an order from longtime Boeing customer Japan Airlines Co Ltd (9201.T: Quote).
"We will take it as a sign to try harder and do better," he said, noting that Boeing recently won an order for 34 of its forthcoming 777-9X jet from Deutsche Lufthansa AG (LHAG.DE: Quote). Lufthansa contracted at the same time to buy 25 Airbus A350s.
McNerney said the reliability of the 787 was averaging 97 percent, a decrease from 98.2 percent that Boeing cited in June, during a congressional hearing on the 787's burning battery problem, which prompted regulators to ground the plane for more three months earlier this year. Continued...