By Andy Owens
Published Oct. 23, 2013
The Boeing Co. released third-quarter earnings this morning, reporting an increase in earnings and revenue driven by commercial aircraft deliveries.
Third-quarter revenue was up 11% to $22.1 billion for the aircraft maker, which attributed the increase to higher deliveries from the commercial airlines division.
Boeing also revised its earnings per share outlook for the rest of the year. The third quarter saw a 16% increase of earnings per share from $1.55 to $1.80 compared with the previous quarter, said Boeing CFO Greg Smith in an earnings call with analysts today.
Previous annual earnings per share were forecast to be between $6.20 and $6.40 per share. That has now been increased to $6.50 to $6.65 per share, Smith said.
Boeing President and CEO Jim McNerney also announced the company plans to ramp up production of the 787 program to 12 planes a month by 2016 after hitting a goal of 10 planes per year by the end of 2013. McNerney said the rate of production is seven per month right now.
He also addressed the nagging problems that keep cropping up with several Dreamliner customers. He said airlines flying the 787, which is manufactured and assembled in Everett, Wash., and in North Charleston, are happy with the innovation and fuel efficiencies of the aircraft, but not with overall reliability.
“Improving dispatch reliability for the 787 is at the top of our priorities,” he said, adding that the company is making “good” progress. “We’re working very closely with each and every customer to do that.”
McNerney said the Dreamliner is operating at 97% on average, but some customers are not seeing that level of reliability. One-third of the problems are related to software glitches, he said, so Boeing is making changes to hardware and software components and spare parts for the aircraft.
“We will not be satisfied until we are meeting our customers’ expectations across the board,” he said.
The company’s commercial airplanes division delivered 170 aircraft in the third quarter, including 96 Dreamliners to 16 customers. The company received orders worth $20 billion and is holding a backlog worth $345 billion. Overall orders for the 737 MAX totaled 1,567, and orders for the largest version of the Dreamliner, the 787-10, are at 90.
Several analysts were congratulatory during the earnings call and optimistic in their questions, which focused a lot on the Partnering for Success program that Boeing unveiled at the company’s annual shareholders meeting in Chicago in April.
The program focuses on reducing costs and improving productivity and efficiencies with top suppliers.
McNerney said the program, which is still in its early stages, is expected to return double-digit improvements in costs and production across the company’s supply chains, but it will take time to see all of the possible gains.
“This program does have potential to increase our margins and leverage comes in a lot of different ways. The biggest way is in joint success,” he said.
Boeing is making the same evaluations and changes at its own production facilities to cut costs and increase rates, McNerney said.
The 787 operation in Everett has had a position in the production line, and the entire work flow at the aft manufacturing facility in North Charleston has been reconfigured to increase rates, Smith said.
McNerney said Boeing is working with individual suppliers at different levels. Some will take more time and will need to refine what they’re doing to see the larger gains the company hopes for. He said those who buy in to the program’s philosophy, which is a priority for the aircraft maker, will grow with Boeing.
“I think a lot of them see the increased business we can do together if they drive as hard on productivity and cost production as we are,” he said. “We are trying to lead by example here.”