Tanker charge tarnishes Boeing's second-quarter profit
By Sweta Singh
(Reuters) - Boeing Co reported a 52 percent jump in quarterly profit, helped by higher commercial plane deliveries and one-time tax gains, but investors were spooked by rising costs in its military tanker program.
Boeing's shares fell as much as 3 percent after the company said it took a $272-million charge related to its tanker program and maintained its 2014 cash-flow forecast.
The stock was the biggest loser on the Dow Jones Industrial index, which was down 0.41 percent by midday on Wednesday.
The planemaker said the charge reflected additional engineering and system installation costs related to the aerial tanker program, which has already raised concerns over cost overruns.
"To us it is worrying that Boeing is booking a charge of this magnitude at a relatively early stage in this long-term program, particularly given recent assurances from management that everything was going to plan, RBC Capital Markets analyst Robert Stallard wrote in a note to clients.
The planemaker retained its cash flow outlook at $6.25 billion for the year.
"This may create doubt as to whether Boeing can generate the cash flow that many are hoping for," Stallard wrote.
The company delivered 181 aircraft in the second quarter. This included 30 Dreamliner jets and 124 narrow-body 737s. Continued...