Boeing reports 50 percent decline in 1Q profit
PITTSBURGH -- Boeing Co., the world's second-largest plane maker, said Wednesday its first-quarter profit dropped by half, hurt by production cuts as airlines postpone deliveries of new planes. It also forecast lower earnings for the year and reduced aircraft prices.
Demand for the Chicago-based company's jetliners has tumbled as the recession dampens demand for air travel and air cargo services. Airlines have grounded planes as fewer people fly, and tighter credit markets have made it more difficult for potential buyers to obtain financing for new aircraft.
Boeing said it plans to slash spending and restructure parts of its business as the global economic downturn presents "unprecedented challenges." In January, the company announced plans to cut a total of 10,000 jobs after reporting a surprise loss for the fourth quarter.
In its latest quarter, Boeing earned $610 million, or 86 cents per share, compared with $1.21 billion, or $1.62 per share, during the same period last year.
The results included a previously-announced charge of 38 cents related to planned production cuts of its twin-aisle 777, plans to delay stepped-up production of its 747-8 and 767 planes and lower anticipated prices.
Excluding one-time charges, profit reached 87 cents per share. On average, analysts had expected a profit of 91 cents on revenue of $16.70 billion, according to a survey by Thomson Reuters.
Revenue edged up 3 percent to $16.50 billion.
J.B. Groh, an analyst at D.A. Davidson & Co., said investors were encouraged by Boeing's indication that the 787 program remains on schedule, with the first test flight of the next-generation aircraft scheduled for the second quarter and deliveries slated to begin early next year.
Boeing lowered its outlook less than expected, considering the previously announced charges, lifting the company's shares in early trading, he said.
The company cut its 2009 profit forecast to a range of $4.70 to $5 per share, from $5.05 to $5.35, reflecting lower earnings at its commercial airplane business.
Boeing has struggled with its 747 program, which has operated at a loss and accounts for most of the 38-cent charge. Last year, the company said it was delaying deliveries of the 747-8 freighter and passenger jets due to design changes, limited engineering resources and a strike that shut down the company's commercial jet factories for eight weeks.
For the 777, Boeing said earlier this month it would reduce monthly production of the plane to five from seven starting in June 2010, a move expected to result in an undetermined number of job cuts.
Boeing had built up a record backlog during three years of booming demand that ended last year, when orders plunged. On Wednesday, the company said its backlog was worth $339 billion at the end of March, down 4 percent in the quarter. Lower expected prices and cancellations of 32 787s this year contributed to the decline.
"The expanded global economic downturn is presenting unprecedented challenges in our commercial airplane markets," Jim McNerney, Boeing's chairman, president and chief executive, said in a statement.
Shares of Boeing climbed 65 cents, or 1.8 percent, to close at $37.30 Wednesday. During the quarter, the stock slid nearly 17 percent, briefly hitting its lowest point in about six years -- $29.05 per share.