Satellite systems has "performance and process issues" and sees Q1 earnings halved

Boeing suffered a $1.2 billion net loss in its first quarter, although sales rose 4% to $13.8 billion compared with the same period in 2001. Most of the dramatic fall from a net profit of $1.2 billion in 2001 was due to accounting changes and several non-recurring gains in 2001, but net profits before non-recurring charges were still down 21%at $602 million.

Chairman Phil Condit admits the company had widespread problems at its satellite systems division. The "performance and process issues" were not limited to a single activity or project, he says, and halved the division's earnings to $42 million for the quarter. The successful launch of the new Delta IV booster, now due in late August, would be "key" to the division's success, he says, adding that he expects growth in missile defence and integrated battlespace sales to compensate for slow commercial satellite sales.

The company forecasts sales of $54 billion in 2002 and $52 billion in 2003 - the anticipated fall in airliner deliveries will not be totally offset by predicted increases in defence and space sales.

Commercial aircraft sales have been seriously affected, says Condit, and the 30,000 job cuts due by the middle of the year represent a reduction in manufacturing rate to half that seen in mid-2001. Boeing Capital has also been affected by the slowdown, as much of its business is in financing aircraft purchases.

Boeing delivered 110 aircraft in the quarter compared with 122 last year. Forecast civil deliveries are unchanged at 380 aircraft in 2002 and 275-300 in 2003. While sales of single-aisle aircraft such as the Boeing 737 are forecast to remain solid, Condit says sales of twin-aisle aircraft are "a watch item". Demand for widebody aircraft has been hit badly, causing concern over the future prospects of the 777 and 747 Next Generation airliners. If, as Boeing fears, the widebody market continues to underperform, the mix of deliveries could include more cheaper single-aisle aircraft.

Military Aircraft Missile Systems saw sales rise 22%. Future projects include the 767 tanker lease to the US Air Force, with the first delivery due in early 2005, and the US Army Future Combat System programme, which is "a long-term prospect" yielding high revenues over the next decade, Condit says.

Source: Flight International