Despite slowing commercial aircraft sales, Boeing has raised its revenue forecast for the year, and confirmed its outlook for 2002, saying its six-year strategy of diversification is starting to pay off.
Nevertheless, the company is under pressure from Wall Street analysts who believe the projections are over-optimistic in the face of the losses announced by airlines hit by the slowing US economy.
Boeing has reported second-quarter net earnings of $840 million, up 35% over the same period last year. Revenues were up 4% to almost $15.4 billion. Chairman Phil Condit says the strong performance was the result of "running healthy core businesses". Boeing Commercial Airplanes (BCA), Military Aircraft & Missiles (A&M) and Space &Communications (S&C) all reported improved performances.
The company has increased its revenue forecast for the year by$1 billion, to $58 billion, largely because 32 MD-80s on lease to TWA have been converted to sales following the merger with American Airlines. Boeing also expects to deliver 538 commercial aircraft this year, eight more than planned.
More importantly, the company has reaffirmed its revenue forecast for 2002 of more than $62 billion, despite revising projected commercial aircraft deliveries downwards from 530 to "between 510 and 520", says Condit. The drop in deliveries will be offset by further improvements in performance at S&C, he says. Production of 717 and 737 narrowbodies is expected to fall next year, he says.
Boeing still anticipates selling 400 commercial aircraft this year, despite having booked gross orders for just 180 in the first half. Meeting the 400-aircraft target depends on securing orders for30-40 from China.
In 2003 Condit anticipates a "modest decrease" in commercial aircraft deliveries although overall earnings are forecast to increase because of improvements at A&M and S&C. The only reductions in gross orders so far this year, Condit says, are the result of the TWA take-over and an airline swapping one type for another. But the proportion of options converted to orders has dropped from a typical 70% to 50%, says Boeing. Next year's reduced delivery target of 510-520 aircraft is 85% sold out, the company says.
BCA reported revenues of $9.3 billion in the second quarter, 6% down, but operating earnings increased 8% to $955 million and operating margins rose from 8.9% to 10.3%. A&M saw revenues rise 6% to $3.3 billion, operating earnings 67% to $410 million and margins to 12.5%. S&C reported revenues up 40% at $2.5 billion, operating earnings of $130 million and margins of 5.2%, compared with a loss and negative margins for the same period last year.
Source: Flight International
