Boeing’s Defense Performance Cushioned by Civil Aircraft Sales

by: Matthew Potter
October 21, 2010

Category: Boeing, Business Line, commercial aviation, Companies, Congress, Department of Defense, development program, Earnings, Events, Lockheed Martin, logistics, Military Aviation, production program, Services, U.S. Air Force, U.S. Navy | RSS 2.0

Boeing (BA) followed Lockheed Martin (LMT) in reporting on their earnings with a more positive outlook. Where Lockheed expressed concern with the future defense budget and its potential effect on their revenues and profits Boeing believes that their year will be better then earlier predictions.

Boeing had a net income of about $800 million on revenue of $17 billion. This was mainly driven by higher commercial airplane sales as that market has started to pick up from its lows of 2008 – 2009. The company raised its guidance for the year to $3.80 to $4.00 a share.

Compared to the year previously revenues increased only about $280 million but earnings swung almost $3.6 billion. In 2009 the company had had to take charges related to delays in the 787 and 747-800 aircraft. These programs remain delayed but they have had no recent effects on the company’s bottom line.

Boeing is waiting for word on the upcoming new U.S. Air Force aerial tanker program contract award. The KC-X contract is scheduled to announce the winner between Boeing and EADS (EADS:P) sometime in the next few months. This contract for 179 aircraft will be worth about $35 billion and may be the only major aircraft contract the Defense Department will award for several years.

Boeing due to its diverse product line as in the past has been able to cushion defense downturns with its civil aircraft. The market especially in Asia is expected to grow providing more opportunity for it. As the 787 and 747-800 freighter enter service next year those deliveries and sales will further boost the company’s bottom line. Winning the KC-X will only aid Boeing’s financials.

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