Boeing Co. (NYSE: BA) shares fell after the second-largest commercial plane maker reported disappointing second quarter earnings.
Net income dropped 19% to $852 million, or $1.16 a share, from $1.05 billion, or $1.35 a share, a year earlier, the Chicago-based company said in a statement. Revenue was flat at $17 billion. The results fell short of the $1.22 profit estimate and the $17.3 billion revenue estimate of analysts surveyed by Bloomberg News.
Boeing reaffirmed its 2008 earnings per share guidance of between $5.70 and $5.85 as well as its 2009 earnings per share guidance of between $6.80 and $7.00.
"While we faced some challenges this quarter that affected our results, we remain confident in our outlook for the remainder of this year and 2009," said Chairman, President and CEO Jim McNerney in the earnings release. "Strong global demand for our products and services, a record backlog, and a sustained focus on productivity improvement and execution will continue to drive growth and profitability for this company."
Boeing (NYSE: BA) Wednesday increased its 20-year forecast for global commercial jetliner deliveries for the sector by 2.8%, forecasting that demand for fuel-efficient replacement aircraft will outweigh capacity reductions by U.S. carriers.
Encompassing all airline manufacturers in the sector, Boeing now expects a market for 29,400 new commercial airplanes (passenger and freighter) by 2027, up 2.8% from its previous estimate of 28,600. Boeing added that the forecast factors-in the sector's near-term challenges, including a slowing global economy, surging fuel prices, slowing traffic growth in some markets, and a concerted action by airlines to lower costs.
Shares of Boeing (NYSE: BA) gained 25 cents to $66.18 on the news in Wednesday afternoon trading, despite a 131-point market sell-off in the DJIA.
Boeing added that single-aisle airplanes will make up the bulk of the sector's deliveries during the next 20 years. Strong domestic and intra-regional air travel growth in emerging Asia-Pacific markets, along with continued growth of low-cost carriers worldwide, is driving demand in this segment, the company said. Orders from Asia will comprise 31% of the deliveries; North America, 29%; and Europe/Asia, 27%.
The Boeing (NYSE: BA) 787 Dreamliner has been delayed three times, mostly because of problems with suppliers.The situation has gotten so bad that some of the company's customers, large airlines, say they will ask Boeing for compensation. That could cost Boeing a lot of money.
Boeing management has promised that there will be no more delays and that everyone who wants a plane will get one, on time. But, the best laid plans...
The company's large unions may stage work slowdowns. They argue that the work given to suppliers should have gone to them. They claim that delays could have been cut. Of course, now they want to delay the program further all on their own.
"Unions have the upper hand now,'' said Richard Aboulafia, an analyst with Teal Group, an aviation consulting firm in Fairfax, Virginia, told Bloomberg. "They're determined to get their share of the good times."
Boeing management now faces more criticism because its own labor force can't be held in line. The company's stock has already dropped due to the delays. First suppliers, now its own people.
The news shows that incompetent management usually stays incompetent. Boeing did not control its supply chain, and did not know it had component problems until too late. Now it will be accused of not even keeping tabs on its own unions.
Douglas A. McIntyre is an editor at 247wallst.com.
Reuters reports that German daily Die Welt quotes a customer letter saying that Boeing Co. (NYSE: BA) just announced the fourth delay in delivering its 787 Dreamliner. It was originally scheduled for this month but if Die Welt is right about the fourth delay -- which would affect deliveries scheduled for 2012 -- the 787 would now be 27 months behind schedule. But Boeing denies the report.
The good news as of now is that none of the 55 customers who ordered 787s -- creating a $151 billion backlog -- have canceled. Last month the CourierPost reported that the three initial delays would cost Boeing $4 billion cancellation fees. No word on how much this fourth delay will add to that cost -- if the report proves to be true.
But 2008 is turning out to be far worse year for aircraft orders than 2007 was. Both Boeing and Airbus have played down expectations for plane orders this year, after the record 2,754 orders between them last year. Most analysts are expecting about half that number this year.
The Boeing (NYSE: BA) 787 Dreamliner has been delayed for a third time and deliveries to airlines may not begin in earnest for a year. The news is bad for Boeing, but it is worse for some of the airline partners who were counting on a fixed schedules for getting the new plane into service. The Dreamliner flies farther, saves more fuel, and carries more passengers than many aircraft in service now.
Several airlines, including Qantas, New Zealand Air, Air India, and All Nippon will all ask for money because of the delays. According toReuters, "More than 50 airlines are waiting for 892 Boeing 787s, worth a combined $145 billion at list prices."
The news is very tricky for Boeing investors to assess. There is an excellent case that some of the airlines which expected the 787 this year and next have legitimate claims. Some might even argue that they can cancel their orders and buy a competing product from Airbus. The costs to Boeing could stretch into the tens of billions of dollars. But none of the airlines has made public the value of its damage request. Boeing also might elect to counter these claims, perhaps in court. Of course, being involved in a lawsuit with your largest customers is rarely a good idea.
One thing Boeing's shareholders can be sure of is that the mess is going to cost some money, and that usually moves a company's share price down.
Douglas A. McIntyre is an editor at 247wallst.com.
If Boeing (NYSE: BA) were writing for BloggingStocks:
We have a great article for you; the best you've ever read. It will save you a ton of money, bring back your youth, enlarge your penis or bust line, cure cancer, solve global warming, eliminate the national debt, provide jobs to all Americans, is family-values friendly, tastes delicious but is calorie-free, is hilarious without demeaning any race or sex, and will remain relevant for at least the next twenty years.
Unfortunately, posting of this article will be delayed due to a worldwide shortage of ampersands and the outsourcing of verbs to China. Look for this article in the first third quarter of 2008 2009, although we're happy to take orders (and prepayment) for it at any time.
Until then, you'll have to be satisfied with more of our same old bologna. But the article will be worth the wait. And don't pay any attention to those Europeans promising just as good an article. They don't even speak our lingua franca, do they?
The Associated Press reports that Boeing Co. (NYSE: BA) has announced that it will delay the delivery of its 787 Dreamliner again -- for the fourth time. Specifically, Boeing now expects to deliver in the fourth quarter of 2008 and it says it is building extra time into the testing schedule to reduce the risk of further delays. Delays for 787 could reach between 14 and 18 months from the original goal of September 2007.
I am working on a book about Boeing and I've found two schools of thought on the 787. One school thinks that delays of this nature are normal for an aircraft that uses so much new technology. Airbus has had multi-year delays with its A-380, for example. Another school of thought suggests that Boeing has regally mismanaged its relationships with its suppliers. It outsourced both the design and manufacture of the 787 to suppliers around the world. The idea was that the suppliers would produce all the parts and ship them to Boeing's factory in Washington state. Then Boeing would then snap the pieces together in a few days.
General Motors Corporation (NYSE: GM) and Ford Motor Company (NYSE: F) want to export more of their vehicles around the globe, and are getting a lift from new labor contracts and the weak dollar, which they believe will translate to bigger profits, the Wall Street Journal reported.
The Wall Street Journal also reported that former Fed chairman Alan Greenspan has been criticized for how he handled the economy before retiring two years ago, and is under attack for policies that many say started the current financial crisis.
OTHER PAPERS:
According to a person with knowledge of the matter, the Seattle Post-Intelligencer reported that The Boeing Company (NYSE: BA) is likely to announce a new delay of at least six more month for the 787 Dreamliner this week.
After the market close, the US military announced that it was giving its new tanker refueling contract to Airbus parent EADS and Northrop Grumman Company NYSE: NOC). The market believed that The Boeing Company (NYSE: BA), which has been supplying tankers for years, was a lock to get the deal.
The news is a stunning turnaround for Airbus since its planes will be adapted for military use. A year ago the European airframe company was in real trouble because of product delays. But, the tables have been turned recently. Boeing has been slow getting its new Dreamliner to customers. The plane has been delayed twice.
According toThe Wall Street Journal "Under the contract, the Northrop-led team will build up to 179 tankers based on the Airbus A330 jetliner." The deal is valued at $40 billion.
Shares in Boeing are down over 3% after hours and NOC is up 5.7%.
Douglas A. McIntyre is an editor at 247wallst.com.
"It's not so easy building an airplane; harder still to develop a new one from scratch and then build it in various pieces around the world to be shipped to one place for final assembly," notes technology expert Mark Mowrey.
"Delays aside, the plane remains the most elegant, sophisticated and efficient carrier-class planes in the world, one for which we bet customers are willing to wait.
"We believe the company will move beyond pre-launch troubles this year and continue to innovate along the gamut of its aerospace endeavors, and find the stock's valuation a compelling entry point.
"In addition to a just-identified 3-unit addendum to an existing order for six Dreamliners from Fiji-based Air Pacific, Boeing has racked up orders for 817 of the 787s from 55 different carriers around the globe.
"The airlines were attracted to the advantages the Dreamliner's nearly half composite (instead of a similarly strong, though heavier aluminum and titanium) structure which should utilize 20% less fuel for a given load and range.
Bloomberg News reports that Boeing Inc. (NYSE: BA) is delaying the delivery of its 787 Dreamliner into 2009. It already delayed it from May 2008 to November 2008 several months ago. This may well be the biggest business blunder of its CEO's stellar career.
Since I am writing a book about Boeing and its CEO James McNerney, I have been very focused on his career. And he has had an almost unbroken track record of spectacular success in everything he's done. He was a hockey and baseball player at Yale; went on to Harvard Business School for his MBA. Then he went from Procter & Gamble (NYSE: PG) to McKinsey & Co. to General Electric Company (NYSE: GE), where his 18-year career ended just short of succeeding Jack Welch.
After jumping from GE to 3M Co. (NYSE: MMM), McNerney took over Boeing in 2005 and the company's stock rose dramatically until it became increasingly clear that Boeing would not be able to meet its original delivery deadlines for the 787 Dreamliner. Boeing now claims that the 787 will fly for the first time near the end of the second quarter of 2008 and won't ship to the first customer, All Nippon Airways Co., until 2009. Both dates were pushed back by about three months.
It's the second delay for the commercial aviation giant, which previously had delayed the introduction of the next-generation plane by six months. The 787's maiden flight will now occur near the end of Q2. The company underscored that the fundamental design and technologies for the 787 remain sound.
Investors early Wednesday took Boeing's delay announcement in stride. Boeing's (NYSE: BA) shares rose 16 cents to $78.02 in Wednesday morning trading.
The 787 Dreamliner program has encountered several bottlenecks due to parts shortages and assembly delays. Boeing has 817 orders for the plane, which is considered critical to its early 21st century commercial aviation strategy as it battles with rival Airbus.
Boeing is closing-out 2007 in fitting fashion: with yet another order in an already record year for commercial plane orders for the company.
Boeing announced Thursday Australia-based Qantas has ordered 31 more 737-800 commercial jetliners, in a deal worth roughly $2.3 billion, Reuters reported.
Boeing Co. (NYSE: BA) shares fell after the second-largest commercial plane maker reported disappointing second quarter earnings. 
The 
Here are some highlights from this past week's 
The 
If
.gif){kind=logo}
Boeing has delayed the delivery of the first 787 Dreamliner until early 2009 instead of late 2008, saying the rate at which jobs are being completed 
Earnings preview for Ford
Apple shares rise on report Steve Jobs is free of cancer
Toyota whups GM in the first half of 2008
