Boeing loses $192 million in second quarter, lowers outlook
Wednesday, July 23rd 2003, 12:00 am
News On 6
CHICAGO (AP) _ Boeing Co., struggling in both the commercial space and airplane markets, reported a loss of $192 million for the second quarter on Wednesday and said it expects 2004 profits to fall well short of previous forecasts.
The results, dominated by a $1.1 billion charge reflecting the problems in its satellite and launch businesses, signal Boeing's first back-to-back quarterly losses since 1997, following its takeover of McDonnell Douglas.
Despite a continuing strong performance from its portfolio of defense businesses, the world's largest aerospace company lowered its estimate for next year's earnings by 35 cents per share to a range of $1.75 to $1.95 a share.
It also narrowed its forecast for 2004 deliveries to between 275 and 290 airplanes _ tightened from 275 to 300 _ although it said it remains on track to deliver 280 planes this year. It pegged revenue at $52 billion for next year instead of a range of $52 billion to $54 billion.
The loss for the April-through-June period amounted to 24 cents a share, compared with earnings of $779 million, or 96 cents a share, for the same period a year earlier.
That was better than the recently lowered consensus estimate of analysts surveyed by Thomson First Call, who had pegged the loss at 43 cents a share.
Revenues slid 8 percent to $12.8 billion from $13.9 billion, a decline marked by a 24 percent drop in its commercial airplanes division, to $5.8 billion. Defense revenues jumped 7 percent to surpass the airplane unit at $6.6 billion.
Despite the worst slump in aviation history, dating to the 2001 terrorist attacks, Boeing still earned $313 million from operations at the Seattle-based airplane unit, thanks largely to cost cuts. But that figure was down 44 percent from a year ago, reflecting 38 fewer airplane deliveries in the quarter and higher pension expenses.
In the latest reductions, it said last week it plans to cut 4,000 to 5,000 more commercial airplanes jobs this year than previously planned, pushing the total of positions eliminated to 40,000 in two years.
The company would have been profitable for the quarter but for the huge charge announced last week at the space and defense unit, prompted by a severe drop-off in demand for commercial satellites along with problems at its satellite factory.
``We took strong actions this quarter to recognize and address the challenges in our commercial space businesses,'' chairman and CEO Phil Condit said.
He confirmed on a conference call with Boeing's lowered profit estimate means it doesn't foresee the beginning of a recovery in the commercial airplane business before 2005.
``Since we reported in the first quarter, there have been a few encouraging signs'' in the airplane market, Condit told analysts. However, this severe downturn in commercial aviation continues to dampen demand for new airplanes, particularly for the 757. Demand for services and support, including spares, also remains soft.''
Pressed by analysts and reporters on whether the company will stop making 757s, particularly with the company poised to give the go-ahead for a new 7E7 aircraft, Condit acknowledged that ``there is a risk that that is a decision we will have to make'' but indicated the company still hopes not to make such a move.
Boeing executives said the company would probably take a charge of roughly $200 million if the program is eliminated. The company currently is making just one of the single-aisle planes a month and has a backlog of only 18 unfilled orders _ 11 with Continental Airlines, which said last week it was discussing the terms with Boeing.
Nicolas Owens, aerospace and defense analyst for Chicago-based Morningstar Inc., said the company's more pessimistic forecast for 2004 doesn't change his overall outlook that ``they're going to do fine.''
``They're obviously having a heck of a time, but that's what happens with cyclical companies,'' Owens said.
For the first six months, the company had net a loss of $670 million, or 84 cents a share, compared with a loss of $470 million, or 58 cents, a year earlier. Revenues declined 10 percent to $25 billion from $27.7 billion.