Boeing profit beats on commercial plane recovery

By Kyle Peterson

CHICAGO (BestGrowthStock) – Boeing Co (BA.N: ) reported a quarterly profit that beat expectations, and raised its full-year forecast, helped by a recovery in the commercial airplane market.

The world’s largest aerospace and defense company’s order backlog rose, especially on the commercial side of its business, helped by more Middle East and Asia orders.

Shares of Boeing, a Dow component, gained 2.4 percent to $70.69 in afternoon trading on the New York Stock Exchange.

“So far, the increase in the commercial side is more than compensating for the softening defense business,” said Wedbush Securities analyst Kenneth Herbert, referring to concerns that budget pressures will lead countries such as the United States and Europe to scale back weapons spending.

“Airlines are starting to significantly order jets again after essentially taking 18 months off,” he added.

The global airline industry has rebounded this year from the 2008 and 2009 economic downturn that drained travel demand and caused airlines to slash capacity and halt orders.

Top airlines are reporting better results this year. On Wednesday, Delta Air Lines (DAL.N: ) and US Airways Group (LCC.N: ) both reported higher-than-expected quarterly profits.

THE NUMBERS

Boeing, which competes with Airbus (EAD.PA: ), said its third-quarter profit (Read more your timing to make a profit.) was $837 million, or $1.12 per share, compared with a loss of $1.56 billion, or $2.23 a share, a year ago.

The results beat Wall Street expectations for a profit of $1.06 per share, according to Thomson Reuters I/B/E/S.

The company raised its 2010 earnings-per-share forecast to $3.80 to $4 per share, reflecting its stronger commercial airplanes business. Previously, the company predicted it would earn $3.50 to $3.80 per share in 2010.

Boeing narrowed its revenue forecast to $64.5 billion to $65.5 billion from $64 billion to $66 billion. The company’s order backlog rose to $321 billion.

Revenue from the commercial airplane division rose 11 percent to $8.7 billion on higher airplane deliveries and services volume, the company said.

Boeing Commercial Airplanes booked 257 orders during the quarter while 36 orders were withdrawn. The commercial order backlog amounted to 3,401 airplanes valued at $255 billion.

Revenue from the defense unit declined 6 percent to $8.2 billion on lower volume. This week Britain announced defense spending cuts. Boeing was hit last year by announced Pentagon program cancellations.

On Tuesday, Lockheed Martin Corp (LMT.N: ), the world’s largest defense company, posted a lower quarterly profit, saying contract delays and cancellations in the tough environment for global defense spending could hurt 2011 results.

“This is the trend we’re going to see, slower growth on the defense side. You going to see a gradual decline in defense,” said Alex Hamilton, managing director at EarlyBird Capital.

The company’s defense margins likely could be flat in 2011, Boeing Chief Financial Officer James Bell said on a conference call with reporters and analysts.

The S&P Aerospace & Defense Index (.GSPAERO: ) gained 1.38 percent at midday.

COMMERCIAL PROGRAMS

Boeing reaffirmed its plan to make first delivery of its long-delayed 787 Dreamliner in the first quarter of 2011.

Boeing has entered the final stages of flight tests for the 787-8, Chief Executive Jim McNerney said on a conference call with reporters and analysts.

Boeing said in September it would delay first delivery of the 747-8 Freighter, its biggest commercial jet, to mid-2011 from the fourth quarter of 2010. Some experts say the delays have damaged Boeing’s credibility.

McNerney said Boeing is still deciding whether to build a new version of its hot-selling narrowbody 737 or put a new engine in the current design to improve fuel efficiency.

“We see a new airplane opportunity out in the 2020 range, and, therefore, are continuing to question the necessity of a reengine in the meantime, although we’re studying it hard,” McNerney said.

“And it is conceivable we would conclude that a reengining makes sense,” he said. “But with a new airplane in the 2020 time frame, it’s not clear that it would.”

(Reporting by Kyle Peterson. Editing by Maureen Bavdek, Derek Caney and Robert MacMillan)

Boeing profit beats on commercial plane recovery