Boeing keeps tough line on Bombardier as earnings fall

NEW YORK: Boeing strongly defended its tough stance in a trade dispute with Canada’s Bombardier Wednesday, as it reported lower quarterly earnings in part due to unexpected costs on a military contract.

Boeing chief executive Dennis Muilenburg defended a complaint against the Canadian company over alleged illegal subsidies, a dispute that has deepened tensions between Canadian Prime Minister and US President Donald Trump.

“We like competition. It makes us better,” Muilenburg said on an earnings conference call.

“We can win, but it’s important that everyone plays by the same rules.”

The comments came as Boeing reported an 18.7 per cent drop in third-quarter earnings to US$1.9 billion.

Revenues rose 1.7 per cent to US$24.3 billion.

Results were dented by US$329 million in new unexpected costs on the KC-46 military refuelling tanker due to changes as the venture moves into late-stage testing and certification.

Boeing also booked expenses of more than US$1 billion on the tanker in a series of announcements in 2015 and 2016.

Muilenburg said Boeing was in the home-stretch of the contract, which is ultimately expected to involve hundreds of aircraft over many years.

“We’re not completely at the finish line, but we are clearly closing in,” Muilenburg said.

Boeing’s commercial division delivered more planes in the third quarter compared with the year-ago period, but the increase came from the narrow-body 737, which is less costly than some other models.

Revenues and profits in Boeing’s military division declined, although analysts believe additional orders in defence should fuel growth in the coming period.

The aerospace giant lifted its full-year profit forecast range by a dime to US$11.20 to US$11.40 per share, citing a lower-than-expected tax rate.

There was no change to the forecast for revenue or commercial plane deliveries.

Heading into Wednesday’s report, Boeing shares were up nearly 75 per cent on the year. Analysts were generally upbeat on the results, despite the tanker charge.

“Although Boeing continues to throw off lots of cash and the business is well-positioned for growth in commercial airplanes... we think shares are overvalued,” said Morningstar analyst Chris Higgins.

Shares ended down 2.9 per cent at US$258.42.

Muilenburg took an unwavering stance on the Bombardier controversy, which has led the Department of Commerce to propose heavy duties on Bombardier’s new C-Series jetliners. — AFP