Boeing Co. surprised Wall Street on Wednesday with earnings of $1.46 a share or $1.1 billion for the third quarter compared with analysts’ average forecasts of $1.10 a share.
The higher profits came as a result of near 10 percent operating margins in the company’s Puget Sound-based commercial airplanes division and steady results in its defense division.
With that good earnings news, however, came confirmation of what analysts had been predicting for the troubled 787 Dreamliner program. The company said it will spread initial research and development costs, delay penalties and other startup costs for the program over the first 1,100 aircraft. Boeing has orders for 793 of the twin-engine, medium-sized aircraft.
That initial “accounting block” is nearly three times the typical 400-plane size for new aircraft. The large size of that block is indicative of the size of the upfront costs Boeing paid to get the plane in the air. Some estimates place that cost at $16 billion.
The news of the accounting treatment for the new plane came as the first 787 completed its first commercial flight between Tokyo and Hong Kong. The flight was a charter for airline, aerospace industry and media officials as well as members of the public selected by lottery.
The initial flight by launch customer ANA Airways was 40 months later than originally scheduled because of Boeing’s delayed delivery of the first 787.
On the new airplane front, Boeing also revealed it is dropping projected deliveries for the year to 480 from the previous prediction of 485 to 495. That decline is due for the most part to delays in delivering the company’s two newest aircraft, the 787 and the 747-8.
In spite of those delivery delays, Boeing upped its prediction for 2011 profits from the previous $3.90 to $4.10 a share to $4.30 to $4.40 a share.
The company needs to ramp up production of the 787 to 10 a month by 2013 to meet projected delivery schedules and profit predictions. Boeing has been producing about two 787s monthly at its Everett plant.
The company will put two more assembly lines in action to reach the 10 monthly figure. One is a second assembly line in Everett and the other is a new assembly line in Charleston, S.C.
The composite-bodied 787 has been plagued with production, design and labor problems since its July 2007 rollout.
Roughly half of Boeing is its commercial airplanes division. The other half is the defense division, which generated much of the company’s profit growth. Defense had operating earnings of $824 million, up 20 percent. Revenue was flat at $8.2 billion.
Earnings at Boeing Commercial Airplanes rose 7 percent to $1.09 billion, and revenue climbed 9 percent to $9.52 billion.
John Gillie: 253-597-8663 john.gillie @thenewstribune.com
The Associated Press contributed to this report
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