Boeing reports decent results

Boeing (BA) second-quarter results beat expectations with profits jumping 17%, reflecting a year-earlier charge and strength at its defense business.

Boeing said it has identified a “technical solution” to the problem that caused the Dreamliner’s fifth delay and said an updated schedule will be released sometime in the third quarter. The Seattle Times reported today that the maiden flight is four to six months away, according to unidentified engineers with knowledge of the problem. The newspaper said Boeing must redesign the area where the 787’s wing joins the fuselage, and parts are difficult to install on the test planes that already have been built.

Revenue and total commercial airplane deliveries were roughly flat in the quarter, but the second half numbers should look strong due to very easy comparables (due to last year’s machinists’ strike). The defense business saw revenues rise 9% and operating earnings grow 38%, with growth in all underlying segments.

Operating cash flow totaled $1 billion during the period, marking a reversal of an operating cash outflow in the same quarter last year. Total company backlog fell 3% sequentially as Boeing continues to eat away at this large buffer – the commercial airplane segment’s backlog of $257 billion is still more than seven times annual segment revenue, however.

Given the well-known challenges with its commercial and defense markets, Boeing’s results should be viewed positively.
--

Peter J. Lazaroff