Boeing Loses $1.6 Billion In 3Q
NEW YORK (AP) -- Boeing Co. lost $1.6 billion in the third quarter, hurt by growing costs from two troubled plane programs that forced the airplane maker to slash its profit forecast.
The world's second-largest commercial plane maker after Europe's Airbus, Boeing has struggled to launch its new 787 passenger plane and a revamped version of its classic 747 jumbo jet. Production delays, parts shortages and last-minute fixes have cost the company billions in write-downs along with additional design and manufacturing expenses.
While sales edged up 9 percent during the quarter, profits took a big hit because Boeing booked charges of more than $3.6 billion for its two plane programs.
They "clearly overshadowed what continues to be otherwise solid performance across our commercial production programs and defense business," Boeing Chief Executive Jim McNerney said in a statement following the results announcement Wednesday.
They also led the Chicago-based company to cut its 2009 profit forecast to $1.35 to $1.55 per share from $4.70 to $5 per share.
Boeing's quarterly loss amounted to $2.23 per share, compared with earnings of $695 million, or 96 cents per share, a year earlier.
Quarterly revenue rose to $16.69 billion from $15.29 billion a year earlier. But the comparison was made easier by a labor strike and supplier problems last autumn, which sliced $2.1 billion off revenue.
Sales from Boeing's defense business, which makes fighter jets, satellites and security systems, rose 3 percent. The business accounts for about half the company's overall revenue. Commercial aircraft revenue rose 13 percent.
But investors remained focused on Boeing's delayed airplanes, with shares down 63 cents to $51.26 in afternoon trade.
Earlier this month, Boeing said production was delayed for a new version of its 747 freighter jet, blaming slow sales and late design changes.
Problems with the 747-8 program are hardly new. Last year, Boeing said it was postponing deliveries because of design changes and a strike that shut down commercial jet factories for eight weeks.
The 747 has been flying for four decades and is one of the world's best-known airplanes. The 747-8 version was unveiled in 2005 and is designed to be larger and more fuel-efficient. The passenger version of the 250-foot plane, called the Intercontinental, seats 467 passengers.
The freighter version of the 747-8 has sold in greater numbers than the passenger model. But demand remains muted as cargo operators have been hit particularly hard by the economic turmoil of the past year.
Boeing now expects the first flight of the 747-8 by early next year. First deliveries of the 747-8 freighter are expected in the fourth quarter of 2010, while initial deliveries of the passenger version remain on schedule for the fourth quarter of 2011.
The 787 has also struggled. In June, Boeing said parts of its aircraft needed to be reinforced. The highly anticipated passenger plane is more than two years behind schedule. The mid-size jet is built with lightweight carbon composite parts to improve fuel efficiency.
The 787 is supposed to be ready for its inaugural test flight by year's end, with first deliveries in the last three months of 2010.
In a conference call, Boeing CEO McNerney said the company expects to announce the location of a second assembly line for the 787 in "the next couple of weeks," having narrowed the choices to Charleston, S.C. -- where Boeing is buying a plant that makes large sections of the plane -- and Everett, Wash., where its commercial aircraft business is based.
Boeing and its union workers have "had trouble figuring it out between themselves over the last few contract discussions, and I've got to figure out a way to reduce that risk to the company," he said. He was referring to strikes such as one that shut down the company's commercial plane factories for eight weeks late last year.
"Diversifying our labor pool and labor relationship has some benefits," he said.
Airline customers and analysts have grown skeptical of the company's timetable for the aircraft. Still, it remains Boeing's best-selling new plane to date, with 840 orders.
The latest charges come as Boeing grapples with dwindling orders amid the global economic downturn, which has undercut demand for air travel and cargo services.
Some airlines have been forced to cancel or delay plans to buy new planes. Boeing has cut costs and announced plans to slash thousands of jobs and scale back production of some aircraft.
Boeing said its order book shrank 2 percent during the quarter, to $320 billion, due to dwindling demand across its commercial airplane and defense businesses.