As the company ramps up production, its ability to profitably produce the airplanes on order will test its commitment to efficient manufacturing, and it should have a greater influence on Boeing's stock performance than the usual practice of keeping track of the yearly order race against rival Airbus.
Its Commercial Airplanes arm, once a laggard, saw its revenue jump by 37% during the quarter. At the same time, the unit's operating margins climbed to 8.7% from 6% during same quarter in 2005. For the full year, operating margins were 9.6%, compared with 6.7% the year before.
The improved operating margins are a key indicator that lean manufacturing techniques, which enabled Boeing to shave multiple days off the final assembly of its jetliners, are playing a role in profitability as Boeing keeps up with demand. Mr. McNerney said he supports the "disciplined" approach that Commercial Airplanes chief Scott Carson and his managers are taking when they consider increasing production rates.
It looks like Boeing has learned its lessons from past mistakes. A strong product line, favorable dollar excahnge rate, and cost cutting are paying BIG dividends.