Boeing Handily Beats Profit Estimates

CHICAGO (Chicago Tribune/TNS) -

Aerospace and defense giant Boeing on Wednesday reported record revenue on the strength of its commercial airplane business, and its profits exceeded Wall Street expectations.

Meanwhile, its CEO on Wednesday attempted to allay fears that recently low oil prices would dampen demand for its fuel-efficient aircraft.

Shares of Boeing, based in Chicago, rose 5.4 percent in trading Wednesday on the New York Stock Exchange, closing at $139.64.

Despite dropping oil prices leading to lower costs for jet fuel, “the value proposition for our airplanes remains compelling,” Boeing CEO Jim McNerney told analysts on Wednesday.

“Historically, we’ve seen aircraft orders more correlated to airline profits,” McNerney said. “Based on discussions with our customers, lower oil prices have not substantially changed their views on preplanning or their commitment to existing delivery schedules.”

Fuel efficiency is only one of the advantages airlines see in ordering new aircraft, such as the 737, 777 and 787 Dreamliner, McNerney said.

The new planes have lower maintenance costs and lead to higher passenger and cargo revenue, better resale values, a better passenger experience and greater range allowing direct flights to new city pairs, he said.

“Overall, we see lower fuel prices and positive traffic trends as beneficial to our industry and growth prospects,” he said.

Still, the company’s profit outlook for this year was more muted than expected.

Boeing said its adjusted earnings this year will be between $8.20 and $8.40 per share. That is below analysts’ forecast of $8.66 per share, according to the FactSet survey. However, the company forecast 2015 revenue of $94.5 billion to $96.5 billion, which would easily beat analysts’ consensus expectation of $93.25 billion.

Boeing’s earnings for the fourth quarter as well as all of 2014 were 19 percent higher than the year before, at $1.47 billion in the fourth quarter and $5.45 billion for the year.

It reported quarterly core earnings, which exclude certain pension and retirement costs, of $2.34 billion, or $2.31 per share, up 23 percent over the year before. That easily beat average analyst estimates of $2.11 per share.

Revenue in the quarter was $24.47 billion, up 3 percent over the prior year. For all of 2014, revenue was up 5 percent to $90.76 billion.

Boeing posted 432 net orders for new commercial planes in the fourth quarter and 1,432 for all of 2014, pushing its backlog of commercial planes to nearly 5,800 with a record value of $440 billion.

The company is also delivering more planes — 195 in the fourth quarter, compared with 172 a year earlier — helping boost cash flow. Revenue in the commercial-plane segment grew by 15 percent.

About one-third of Boeing’s revenue comes from defense-related products, and that part of the company is not doing as well, as defense budgets come under pressure. Defense revenue fell 14 percent, led by a 29 percent decline in money from military aircraft.

“Boeing is entering into 2015 stronger and healthier and better positioned in its markets than any time in recent memory,” McNerney said in a call with analysts Wednesday. The company’s good fourth quarter offers “a compelling picture of the progress we’ve made to enable sustained growth and improving profitability as we near the start of our second century in business,” he said.