GRAHAM WARWICK / WASHINGTON DC
Manufacturer riding slump better than some, with more job losses at Honeywell and falling revenues at Pratt & Whitney
Boeing has revised its commercial aircraft delivery forecast for next year to the lower end of previous projections as US airlines defer more orders. The company expects to deliver between 275 and 285 airliners next year, narrowing its previous forecast of 275-300, and estimates similar deliveries in 2004. With Airbus forecasting 300 deliveries next year, this confirms that 2003 will see Europe outstrip the USA in airliner deliveries for the first time.
With 295 deliveries in the first nine months, Boeing expects to achieve its year-end goal of 380 commercial aircraft. "The delivery forecast is essentially sold out for 2002 and approximately 95% sold for 2003 at the lower end of the range," the company says. Gross orders for 184 aircraft were booked in the first nine months, 18 in the third quarter.
The commercial downturn hit several companies. United Technologies' Pratt & Whitney division saw revenues fall 1% and operating profit 7% as spares and small engine deliveries slowed, while lower after-market volume at Hamilton Sundstrand dragged Flight Systems segment profits down 4% despite 19% higher revenues on increased deliveries of Sikorsky helicopters.
Honeywell is to shed another 3,000-5,000 aerospace jobs by year-end, despite turning around from last year's $308 million third-quarter net loss to post net income of $412 million. Revenues slipped to $5.6 billion and Honeywell has lowered expectations for the full year. Aerospace revenues were down 7% despite strong defence sales and an increase in business-jet engine maintenance on higher fractional-ownership flying.
Boeing is still forecasting revenues of around $54 billion for the year, but has reduced its outlook for next year from $52 billion to $50 billion - more than half of which will come, for the first time, from defence. Operating margin and cashflow projections have also been revised downwards for next year.
Boeing remains profitable despite sharply reduced commercial aircraft deliveries, reporting third-quarter net earnings of $375 million on revenues of $12.7 billion, down from $713 million and $13.7 billion, respectively, for the same period last year. The downturn at Boeing Commercial Airplanes, where deliveries fell from 120 aircraft a year ago to 73, was offset by increased defence revenues and earnings on higher C-17, F-15 and Joint Direct Attack Munition deliveries.
The company took several charges in the quarter, including $250 million to strengthen financing arm Boeing Capital's reserves and revalue investments; $100 million for increased development costs on the 737 airborne early warning and control programme; and $100 million to write down investment in the stalled Teledesic satellite communications venture.
Northrop Grumman's third quarter was hit by a $65 million charge to cover development of the integrated electronic-warfare system for the United Arab Emirates' Lockheed Martin F-16 Block 60. The company also booked a $208 million loss on disposal of its Component Technologies sector. These held net income from continuing operations flat at $141 million, on third-quarter revenues up 24% to $4.2 billion.
General Dynamics performed well, despite Gulfstream falling short of revenue expectations on lower business-aircraft deliveries. Textron's aircraft sector revenues were up slightly on higher sales at Cessna and at Bell, where profitability also improved.
Source: Flight International
