NEW YORK (Reuters) - Boeing Co said on Wednesday it was sticking with the troubled lithium-ion battery technology that this month grounded its high-tech 787 Dreamliner, and that the grounding had no significant financial impact on its 2013 forecast.
Boeing said it will speed up production of the new plane as planned, responding to revelations that the battery has had more problems than previously disclosed.
CEO Jim McNerney said it was “business as usual” and that the company also had not advised suppliers to slow down their shipments of pieces of the 787, the most widely outsourced jet in the company’s 97-year history.
“Nothing that we have learned has told us that we have made the wrong choice on the battery technology,” McNerney said on a conference call with analysts and journalists.
“We feel good about the battery technology and its fit for the airplane. We have just got to get to the root cause of these incidents and we will take a look at the data as it evolves, but there is nothing that we have learned that causes us to question it at this stage.”
The probe into the cause of two burnt batteries this month involves hundreds of experts from Boeing and outside the company but is “highly compartmentalized” and “it’s not drawing any critical resources from any other growth programs we’ve got,” McNerney added.
“Our plan is to continue production of the 787 and to continue the development of the wide-body airplanes,” McNerney said.
The statements came as Boeing posted higher-than-expected profit.
Its shares were up 1.2 percent at $74.52.
Aviation safety agencies in the United States and Japan are investigating what caused lithium-ion batteries to burn on two 787 passenger jets earlier this month, prompting the worldwide grounding.
Boeing has since halted 787 deliveries, and analysts have raised concerns about the cost of the grounding and fixing the battery problem on about 125 jets that Boeing has built so far.
But Boeing released a forecast for 2013 that included no significant impact from the 787.
The company said it expects to deliver at least 60 Dreamliners in 2013 — fewer than the 80 jets or more that some analysts expected — but a figure that implies a four-month delay in delivery, since Boeing is making five 787s a month.
McNerney said Boeing still plans to increase 787 production to seven a month by mid-year and 10 a month by year-end.
The new production forecast raised some eyebrows. Russell Solomon at Moody’s Investors Service was forecasting 100 787 deliveries, and said Boeing’s forecast of more than 60 was “significantly weaker than we had expected.”
Concern about the battery rose on Wednesday after Japan’s two biggest airlines said they had repeatedly replaced sub-par lithium-ion batteries on their Dreamliners in the months before the two incidents that led to the 787 groundings.
The comments from All Nippon Airways Co Ltd, the biggest 787 customer to date, and Japan Airlines Co Ltd indicated problems with the battery system reliability long before one caught fire on a JAL 787 at Boston’s Logan Airport on January 7. A second was badly charred and melted on an ANA domestic flight a few days later, prompting the pilot to make an emergency landing and evacuation.
The two airlines operate 24 of the 50 787s in service. United Airlines is the only U.S. carrier currently flying the 787.
McNerney said the earlier battery replacements were not made because of safety concerns.
“There’s been no incidents that we’re aware of where a battery has been replaced for any sort of safety concerns,” he said. “It’s a replaceable unit designed to be replaced and a matter of routine maintenance.”
He said the replacement rate had been “slightly higher” than predicted.
McNerney declined to give any cost estimates for the 787 problems or discuss the investigation in any detail. The NTSB, which is leading the investigation in the U.S. has not yet established a cause for either of the two battery incidents.
Meanwhile, Boeing said net income fell to $978 million, or $1.28 per share, in the fourth quarter, from $1.39 billion, or $1.84, in the year-ago period, when it posted a special tax gain.
Analysts expected earnings of $1.19 a share.
Ken Herbert, an analyst at Imperial Capital, said wider profit margins from Boeing’s commercial airplanes unit helped the company beat estimates, even as defense revenue declined slightly.
But he was disappointed by the 2013 profit outlook of $5.00 to $5.20 a share, compared with his target of $5.60. The figures include pension charges.
The consensus Wall Street estimate was $5.13 a share for 2013, according to Thomson Reuters I/B/E/S.
Total revenue for the quarter rose 14 percent to $22.3 billion.
The company said it booked 394 net aircraft orders in the quarter, adding that its total order book was nearly 4,400 planes valued at $319 billion, a record tally. In the third quarter, it recorded 369 net orders and had an order book of about 4,100 airplanes valued at $307 billion.
For the first time, Boeing released so-called core results, which exclude most pension expenses that are part of standard accounting measures. Boeing said core earnings rose 9 percent to $1.84 billion in the quarter from $1.69 billion a year ago.
Core earnings per share fell 24 percent to $1.46 from $1.92, but the year-earlier figure included a one-time tax benefit of about 52 cents a share.
Boeing said the new measures better reflected its operating performance by factoring out market fluctuations and interest rate assumptions that can make pension expenses change significantly from quarter to quarter.
Reporting by Alwyn Scott; Editing by Jeffrey Benkoe and Marguerita Choy