But production rate increases are sweetening the company's projections -- as well as those of Spirit AeroSystems.
Boeing Co. recorded a 31 percent drop in net income in the third quarter and said research and development costs are rising for its new 787 Dreamliner as the company deals with weight and supplier issues.
Profits for the quarter were affected by a charge for the discontinuation of its in-flight Internet service Connexion. At the same time, revenue grew 19 percent, bolstered by demand for commercial jets.
Boeing is raising delivery rates in 2007 from an expected 395 shipments this year to between 440 and 445 next year, the company said. Boeing delivered 100 airplanes in the third quarter this year, up from 62 a year ago.
Deliveries in 2008 are expected to rise over levels in 2007.
That bodes well for Wichita-based Spirit AeroSystems, which builds parts of all Boeing jets except the 717.
"As that work comes here, that's always good news for the workers and for the entire community," said Machinists union spokesman Bob Wood. "We look forward to having an increase in work out there."
JSA Research analyst Paul Nisbet thinks most of the production increases will occur in the 737 program. Wichita builds the majority of the 737's fuselage.
Spirit spokesman Fred Solis said the company couldn't comment on the effect the increased production rates could have on company.
Spirit has more than 230 job openings in Wichita, according to the company's Web site.
Boeing officials said Wednesday that the company will need to spend hundreds of millions of dollars more than expected this year and in 2007 for the 787's research and development.
"We are at that point in the program where weight remains a dogged issue," chairman and chief executive Jim McNerney said on a conference call.
Boeing officials declined to identify the specific components that are overweight.
The company also has some supplier implementation issues, McNerney said.
"We are addressing all of them with aggressive recovery plans," he said.
The first 787 delivery is still planned for 2008, on time and in accordance with the company's contractual obligations, the company said. Boeing has 432 firm orders from 34 customers for the 787.
Boeing expects research and development spending of $3.1 billion to $3.2 billion this year and from $3.2 billion to $3.4 billion in 2007, up from an estimated $3 billion for each year. The spending will be for the 787 and for the passenger version of its new 747 widebody jet.
Prudential Equity Group analyst Byron Callan said he doesn't see the increased spending as harbingers of deeper problems.
"This higher R&D was accommodated by better operating performance within company guidance," he said in a note to investors.
Boeing recorded net earnings for the third quarter ending in September of $694 million, or 89 cents a share, down from $1.01 billion, or $1.26 a share, a year earlier.
Results included a charge of $280 million, or 22 cents a share, to leave the Connexion business and also suffered by comparison to a year ago when the company reaped 93 cents a share in gains from tax benefits and asset sales.
Revenues, meanwhile, totaled $14.7 billion, up from $12.4 billion.
Boeing also increased its estimate for 2007 earnings by 20 cents a share to between $4.45 and $4.65. It also raised its revenue forecast next year to $65.5 billion to $66 billion, up from previous guidance of $64.5 billion to $65.5 billion.
Boeing's commercial airplanes division recorded revenues for the quarter of $6.7 billion, up 45 percent from the same time a year ago. Operating earnings totaled $646 million, up 171 percent from $238 million a year ago.
The backlog for commercial jets rose to a record $154 billion. The division also took orders for 243 planes during the quarter.
Revenues at its Integrated Defense Systems, which includes Boeing's Wichita facility, increased 4 percent during the quarter to $7.8 billion. Earnings from operations, meanwhile, dropped 33 percent to $879 million.
Source: www.kansas.com, 26 October 2006