Boeing CEO sees no downturn in commercial airplane cycle
By Alwyn Scott
(Reuters) - Boeing Co's (BA.N: Quote) top executive reaffirmed on Wednesday the company's outlook for strong growth and cash flow over the next five years, dismissing investor concerns that the aviation business cycle is on the cusp of a downturn.
Chief Executive Officer Dennis Muilenburg, speaking at an investor conference, also said the company is "very confident" in its accounting for 787 costs.
They were his first public remarks since a report last week that the Securities and Exchange Commission was looking into the company's use of program accounting with the flagship 787, which has run up about $30 billion in deferred costs. He declined to confirm the Bloomberg report about the SEC probe.
Muilenburg, who became CEO last July 1, is in the spotlight as Boeing's stock has fallen 22 percent this year amid concerns the commercial aviation cycle is heading into a downturn and questions about Boeing's strategy for its defense business, where sales are flagging.
Boeing shares were up nearly 3 percent at $115.90 in mid morning trading on the New York Stock Exchange.
Muilenburg said little about defense at the conference organized by Barclays. On commercial aircraft, he acknowledged some customers in Russia and Brazil had canceled or deferred jetliner orders, without giving details.
But he said passenger traffic, and aircraft demand, will increase faster than economic growth in many developing countries because incomes there are rising.
Boeing's backlog of jetliner orders amounts to seven years of production, which is "fundamentally different than anything you have seen in history," he said. That gives Boeing confidence that the commercial aviation cycle is not in danger of downturn, Muilenburg said. Continued...