Boeing may increase dividend as Dreamliner deliveries start

Boeing Co. will consider increasing its dividend in 2012 and repurchasing shares as the planemaker's cash flow improves with deliveries of its new 787 Dreamliner and 747-8 jumbo jet.

The Chicago-based company will also begin looking at acquisitions once it has reduced its research & development spending and paid back some debt, Chief Financial Officer James Bell said today in a JPMorgan conference that was broadcast on the Web. Bloomberg analysis projects the dividend may increase next year to 43 cents a quarter from 42 cents this year.

“We'd like to get back on track and make sure that our dividend tracks with our profitability, and as we have the liquidity to fund that, we will do it,” Bell told investors.

Boeing expects to deliver the first 747-8 freighter in the middle of this year and the first 787 Dreamliner in the third quarter, Bell reiterated. The planes are years behind schedule and billions of dollars over budget because of problems with the new materials and processes Boeing is using.

The Dreamliner has now completed 85 percent of the testing required by the U.S. Federal Aviation Administration for passenger service to begin, Bell said. The remaining tests are a matter of “ticking off” the flight hours required to show the plane's durability, Bell said.

“These are not driven by technology, so we're a lot more comfortable that we're over the critical ones and the next 15 percent will just take the time it takes to complete the regimen,” he said.

The plane's production and deliveries won't be hampered by the earthquake in Japan, where 35 percent of the Dreamliner is built by three Boeing partners near Nagoya, Bell said. While some smaller Japanese suppliers have been hurt, the parts they produce can be more easily replicated if a shortage arises before the companies are able to recover, he said.

Plans to boost production of the 777 jet to record rates are going ahead as planned, and the company is considering raising output of its best-selling 737 to “42 and beyond,” from 31.5 a month now, as delivery slots are sold out, he said.

Bell repeated his previous forecast that the first quarter would produce about 15 percent of this year's earnings, and that profit would improve sequentially throughout the year. Analysts project Boeing to post earnings of $4.13 a share this year, the average of 25 estimates.