Boeing's long struggle getting its Dreamliner production lines operating smoothly is finally paying off.
The company's revenues and earnings jumped in the third quarter, driven by stronger deliveries of its commercial airplanes including the 787 Dreamliner.
Buoyed by those strong results, the company Wednesday announced it will increase 787 production to 12 monthly from 10 in 2016 and to 14 monthly by the end of the decade. Boeing builds the Dreamliner on three production lines, two at its Everett plant and one in Charleston, S.C.
The company told analysts it is reconfiguring its production lines both in Everett and Charleston to incorporate changes that will make them more productive and efficient.
The 787 entered commercial service more than three years behind schedule because of production issues particularly with Boeing's major partners who shouldered a larger-than-usual share of the plane's design and construction burden.
Boeing reported earnings per share rose by 16 percent to $1.80 not including extraordinary items that the company believes don’t reflect Boeing’s continuing financial situation. Revenues increased by 11 percent to $22.1 billion.
The higher earnings were above Wall Street’s predictions. Boeing surged 5.3 percent to $129.02a share on news of the better-than-expected earnings.
Boeing announced that its projection for full-year profits is increasing to between $6.50 and $6.65 a share.
Those higher figures represented in large measure increased deliveries of the company’s airliners. Those rose from 149 in last year’s third quarter to 170 in this year’s third quarter.
Boeing has increased the delivery rate on three of its jetliner production lines, the 787, 777 and 737.
The higher commercial deliveries increased the company’s commercial division revenues by 15 percent to $13.99 billion and its earnings from operations by 40 percent to $1.62 billion. Operating margins from the company’s commercial operations, headquartered in the Puget Sound area, rose from 9.5 percent to 11.6 percent, the company said in an early morning Wednesday earnings release.
The company backlog of orders grew to a record $415 billion including $27 billion in net orders during the third quarter. Most of that increase was attributable to commercial aircraft sales.
The quarter saw the successful first flight of the 787-9, a version of the Dreamliner with 40 seats more than the basic 787-8, and the launch of the 787-10 program planned as the largest member of the 787 family.
Boeing Chairman Jim McNerney said the company is still working to improve the 787's reliability. The plane has been plagued by startup issues including a nearly four-month grounding early this year because of battery fires.
McNerney said the plane's dispatch reliability record now exceeds 97 percent, but the company is making changes both on the production line and at airline customers' sites to improve that record. About one-third of the problems the plane has encountered, he said, are related to software issues, many of which caused false trouble alarms.
The company’s Defense, Space & Security division saw its earnings from operations fall by 19 percent in the quarter as Pentagon spending declines and several of the company’s aircraft programs reach the end of their life.
“Despite the uncertainty of the U.S. defense market, overall our customer-focused business strategies and disciplined execution on our programs are producing the results we expect, and our strong year-to-date performance and positive outlook allow us to increase our 2013 guidance for earnings and operating cash flow,” said Boeing Chairman Jim McNerney.
John Gillie: 253-597-8663