bbobbo
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Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 1:59 am

Quote:
Boeing Swings to a Profit,
Raises Full-Year Forecast
By ANN KEETON
July 25, 2007 12:40 p.m.

CHICAGO -- Boeing Co. Wednesday reported better-than-expected second-quarter earnings on soaring sales of commercial airplanes, as revenue from defense contracts also rose.

The defense and aerospace giant raised its financial outlook for the full year, but didn't change its forecast for 2008. Boeing also said it is on track to deliver the first 787 Dreamliner in May, although research-and-development costs for the fuel-saving jet -- which has generated more orders than any new aircraft in history -- have risen.
Boeing's 787 Dreamliner plays a starring role in its latest earnings report. The aerospace giant said it'll have to spend more on the jet, but it'll still meet its deadline to have it rolled out by next year.

Shares of the company were up 3.2% at $107.05 in early trading on the New York Stock Exchange, after hitting a fresh 52-week high earlier in the session.

The Chicago company said net income in the second quarter jumped to $1.05 billion, or $1.35 a share, compared with a net loss of $160 million, or 21 cents a share, a year earlier, when the company took charges of $1.07 billion for a Justice Department settlement for defense contracting, and delays on foreign military contracts. Revenue in the latest period was $17.03 billion, up 14%.

The mean estimate of analysts polled by Thomson Financial was for earnings of $1.16 a share on revenue of $16.2 billion.

"Our results and increased outlook reflect strong markets, preferred products and services and a focus on execution, growth and productivity," said Chairman and Chief Executive Jim McNerney. "Our extensive productivity gains enable us to invest to protect key growth programs while still improving our financial performance."



Quote:
Higher Spending on 787

The company expects higher-than-projected spending on research and development, due largely to the 787 Dreamliner, but Boeing anticipates that costs will be more than offset by growth and productivity gains.

R&D spending for 2007 is now projected to be $3.7 billion, up from a previous forecast of $3.2 billion to $3.4 billion. The company pegs 2008 R&D spending at $2.8 billion to $3 billion, though it warned "certain development program challenges could push spending above that range."

"While the risks inherent in the latter stages of major airplane development programs remain," the company said the Dreamliner should make its inaugural flight by the end of September, with the first delivery to a customer on schedule for May.

Analysts have been watching the timetable for any possible delays, as has rival Airbus with its soon-to-be-delivered A380 jumbo plane. Boeing's lightweight jet, the first to have a body and wings made of composite materials, rather than aluminum, is expected to save at least 20% on fuel, with long-range flight capability.

From WSJ, Boeing Swings to a Profit, Raises Full-Year Forecast (subscription required)

First flight for 787 by the end of September.
 
osiris30
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 2:03 am

Quoting Bbobbo (Thread starter):
First flight for 787 by the end of September.

Still in the same window it's been.. by the end of September means anytime between now and then..

Quoting Bbobbo (Thread starter):
The company expects higher-than-projected spending on research and development, due largely to the 787 Dreamliner, but Boeing anticipates that costs will be more than offset by growth and productivity gains.

R&D spending for 2007 is now projected to be $3.7 billion, up from a previous forecast of $3.2 billion to $3.4 billion. The company pegs 2008 R&D spending at $2.8 billion to $3 billion, though it warned "certain development program challenges could push spending above that range."

Interesting on two fronts.. a) what spending in particular... and b) "Boeing anticipates that costs will be more than offset by growth and productivity gains"... hrmm????
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
pygmalion
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:03 am

Quoting Osiris30 (Reply 1):
Boeing anticipates that costs will be more than offset by growth and productivity gains"... hrmm????

In other words, the increased spending will be paid for by reduced costs in other areas and will not change profits. Boeing expect profit margins to increase even though they are spending a bit more money on R&D.
 
osiris30
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:07 am

Quoting Pygmalion (Reply 2):
In other words, the increased spending will be paid for by reduced costs in other areas and will not change profits. Boeing expect profit margins to increase even though they are spending a bit more money on R&D.

Pygmalion: I know what the words mean.. but what area's specifically, etc., I'm nosey LOL. What growth, what productivity gains.. details man.. I want details.. are they planning on increasing production and thus lowering per unit costs? Are the aircraft going to be cheaper to build than they had initially anticipated.. is it just account tricks because unit sales are so strong?

Lots of things those simple words could mean.. and that's what I'm after.
I don't care what you think of my opinion. It's my opinion, so have a nice day :)
 
Boston92
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:09 am

Random question here, but at what time does Boeing recieve the funds from a customer. At time of order, time of completion, or time of delivery (or other time)?
"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
 
gbfra
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:11 am

Quoting Osiris30 (Reply 3):
Pygmalion: I know what the words mean.. but what area's specifically, etc., I'm nosey LOL. What growth, what productivity gains.. details man.. I want details.. are they planning on increasing production and thus lowering per unit costs? Are the aircraft going to be cheaper to build than they had initially anticipated.. is it just account tricks because unit sales are so strong?

Lots of things those simple words could mean.. and that's what I'm after.

There is a Boeing conference call which you can follow...
The fundamental things apply as time goes by
 
BoomBoom
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:41 am

In spite of the higher 787 outlays, Wall Street likes what it hears

Quote:
Speaking to the increase in spending, Chairman and Chief Executive Jim McNerney told investors during a conference call that "this is absolutely the right thing to do." Mr. McNerney added the commercial airplane group's "continued growth and productivity improvements will allow it to more than offset the impact of this R&D growth" on the 787 Dreamliner.

The company's timetable to get the 787 ready means that engineering and testing must be wrapped up in order to deliver it to All Nippon Airways in May. Boeing believes it has enough time to get the work done. "When you add it up, it's aggressive but it hangs together," Mr. McNerney said.

Boeing's commercial airplanes group's sales margins were 11%. That figure was higher than the defense business margins of 10.7% during the quarter.

http://online.wsj.com/article/SB1182...147046.html?mod=home_whats_news_us
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SEPilot
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:46 am

Quoting Boston92 (Reply 4):
Random question here, but at what time does Boeing recieve the funds from a customer. At time of order, time of completion, or time of delivery (or other time)?

As far as I know, they receive a deposit on order placement, and then get most of the money on delivery. I have heard that the deposit is usually 1/3, but I don't know if this is true. I imagine that like everything else in this business the particular details are negotiable, and may vary from customer to customer.
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keesje
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 7:13 am

Good moment to bring the news of cost overruns "lift spending on R&D" to overcome unforeseen 787 problems. The headlines go for the profit, the 787 news is marginalized. Seriously, Airbus should learn from this.


Boeing is being forced to increase its research and development spending by several hundred million dollars to overcome problems in its 787 Dreamliner development programme and meet its target for first delivery in May next year.

The world's leading aerospace and defence group said on Wednesday it was continuing to "address and manage pressures with respect to supplier performance, schedule and weight".

Boeing said its research and development spending would increase this year to $3.7bn from the $3.2bn-$3.4bn previously forecast as a result of the increased spending needed to keep the 787 programme on track. Spending was still expected to fall to between $2.8bn and $3bn next year but this too could rise owing to "certain development programme challenges".


http://news.moneycentral.msn.com/pro...x?feed=FT&Date=20070725&ID=7226507

Well done Boeing media relations / communications!

Even here on airliners.net the 787 news can not be posted seperately -> Double post with the "Boeing Reports Better-Than-Expected 2Q Results" thread.  Wow!

[Edited 2007-07-26 00:16:48]
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Stitch
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 7:25 am

Quoting Keesje (Reply 8):
Good moment to bring the news of cost overruns "lift spending on R&D" to overcome unforeseen 787 problems. The headlines go for the profit, the 787 news is marginalized.

Boeing has a strong head-start and if they don't mis-step, they could keep that momentum going. So I expect Boeing management (and Wall Street) feel it better to spend it now and make the target then try and scrimp and miss, allowing Airbus a chance to catch up.
 
Rheinbote
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 7:28 am

The most interesting statement by Jim McNerney was that 787 first flight is definitely scheduled now for end of September.
 
pygmalion
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 9:58 am

Quoting Keesje (Reply 8):
Good moment to bring the news of cost overruns "lift spending on R&D" to overcome unforeseen 787 problems. The headlines go for the profit, the 787 news is marginalized. Seriously, Airbus should learn from this.

I don't know.... the whole "let's not spend any money on making sure it gets out on schedule and save it up for the 6 billion dollar recovery effort" method seems to work pretty well for Airbus so....

Why change??  sarcastic 
 
BoomBoom
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 10:27 am

Quoting Keesje (Reply 8):
Good moment to bring the news of cost overruns "lift spending on R&D" to overcome unforeseen 787 problems. Seriously, Airbus should learn from this.

Seriously, they should. Airbus got into trouble on the A380 because they tried to things on the cheap and in a rush--not spending the money to upgrade everyone to the same software or taking the time to make sure everything fit.

So in the end it cost them far more in reworking the wiring and late penalties, than Boeing is spending to get the 787 out on time.

Hopefully, they will not make the same mistakes on the A350.
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bbobbo
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 11:25 am

Quoting Keesje (Reply 8):
Good moment to bring the news of cost overruns "lift spending on R&D" to overcome unforeseen 787 problems. The headlines go for the profit, the 787 news is marginalized. Seriously, Airbus should learn from this.

Well, Airbus has to post a profit first. Otherwise, there's no good news to hide behind. Hopefully they have something good to report tomorrow.
 
WingedMigrator
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 12:17 pm

Quoting Rheinbote (Reply 10):
The most interesting statement by Jim McNerney was that 787 first flight is definitely scheduled now for end of September.

 checkmark  all the statements point to vanishing schedule margin. The 787 development budget has now seen two unplanned increases of several hundred million in less than a year (October was the last time).

On schedule, on budget, on specification.... pick any two!!  Sad
 
BoomBoom
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 12:51 pm

Quoting WingedMigrator (Reply 14):
The 787 development budget has now seen two unplanned increases of several hundred million in less than a year (October was the last time).

What would you have them do? Not spend the money now, be late, and have to pay even more in penalties later?

That would be foolish. This is a company that takes its commitments to customers seriously.
Our eyes are open, our eyes are open--wide, wide, wide...
 
XT6Wagon
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 12:54 pm

Quoting WingedMigrator (Reply 14):
all the statements point to vanishing schedule margin. The 787 development budget has now seen two unplanned increases of several hundred million in less than a year (October was the last time).

On schedule, on budget, on specification.... pick any two!!

Boeing R&D is for ALL programs. There is atleast 4 projects "on" right now on the civil side at some level. 787 is the headliner, but you can include the 748, 737RS, and 767LRF on that dime now.

In fact its possible that the recent addition of the 767LRF is responsible for nearly all the increase in R&D depending on how agressive the development program is.

But, nah its easier to just attribute it all to the 787 if thats the "preparationg H" you need
 
WingedMigrator
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 2:37 pm

Quoting BoomBoom (Reply 15):
What would you have them do? Not spend the money now, be late, and have to pay even more in penalties later?

That would be foolish. This is a company that takes its commitments to customers seriously.

I quite agree. Throwing money at the problem is the best option available, especially with an unprecedented backlog that essentially guarantees a good return on every dollar spent. It's fascinating to watch Mike Bair walk the tight rope now that the safety net is gone. Those program managers have some serious cojones.  bigthumbsup 
 
ikramerica
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:01 pm

Quoting WingedMigrator (Reply 14):
On schedule, on budget, on specification.... pick any two!!

That's generally the way it goes.

Boeing picked schedule and spec after seeing what happens when you pick budget and spec (A380). When all is said and done, Airbus had to spend money anyway...

How much is the 787 ultimately over budget? It looks like close to a billion right now. Last R&D increase also included some extra 747-8 money IIRC, but this time it seems to be only 787 related and there is a hint that more needs to be spent in 2008 on the 787. Seems like at least $1 billion, ultimately I could see it pushing $2 billion. Still not as bad as the 777 did, at least as people here tell it.
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Stitch
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 3:55 pm

Quoting BoomBoom (Reply 12):
Hopefully, they will not make the same mistakes on the A350.

Airbus did report greater than planned increases in their own R&D budget for 2007 (though not of the magnitude Boeing has), so looks like they to are spending a bit extra...
 
Rheinbote
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RE: Boeing Reports Better-Than-Expected 2Q Results

Thu Jul 26, 2007 9:48 pm

Quoting WingedMigrator (Reply 14):
all the statements point to vanishing schedule margin. The 787 development budget has now seen two unplanned increases of several hundred million in less than a year (October was the last time).

On schedule, on budget, on specification.... pick any two!!

My projections for 787 R&D were something like US$ 7bn overall. Adding yet another billion would still make it a highly efficient operation compared to the 777 which according to Alan Mulally was 12bn in FY95(!) Dollars or the A350, which is put at €10-12 billion by Airbus.

[Edited 2007-07-26 14:51:24]

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