Boeing soars on profit forecast
Boeing Co. raised its profit and cash flow expectations for 2019 on Wednesday, sending shares up more than six per cent amid a boom in air travel and faster production, though it was still fighting supplier delays on its cash-cow 737 jetliners.
The world’s largest planemaker said it expects to deliver between 895 and 905 commercial aircraft in 2019, up from 806 aircraft it delivered last year, which — although just below company targets — kept it ahead of arch-rival Airbus SE for a seventh year.
Investors closely watch the number of planes Boeing turns over to airlines and leasing firms in a year for hints on the company’s cash flow and revenue.
Despite its rosy outlook, America’s biggest exporter faces possible turbulence on a number of fronts in 2019, including financial stress felt by some of its airline customers, signs of a broader economic slowdown and U.S. trade tensions with China, where Boeing ships about 1 out of 4 aircraft that it makes.
There are also unanswered questions related to the deadly crash of a Lion Air 737 MAX in Indonesia in October that thrust a spotlight on the newest version of the best-selling jet, as well as on airline training and maintenance.
Boeing chief executive Dennis Muilenburg told analysts during a conference call that he saw progress in fresh U.S.-China trade talks and separately said aircraft orders would be “moderated” but healthy in 2019, although deliveries dropped in January.
Muilenburg said Boeing would make a final launch decision in 2020 on a proposed new mid-sized jetliner, aimed at a niche market between narrow- and widebody aircraft, depending on the results of a round of commercial pre-marketing which it may begin this year. He had previously spoken of a launch decision in 2019.
The decision on whether to launch the new jet, known as NMA, is expected to reshape competition with Airbus, which dominates the top end of the medium-haul sector.
Muilenburg said Boeing started running 787 Dreamliner assembly lines at a rate ready to support higher output of 14 jets a month, confirming an earlier Reuters report, bringing it within reach of a closely-watched goal designed to boost cash and reduce costs. The 787 transition to 14 per month will be completed by the second quarter, Muilenburg said.
Chicago-based Boeing said its quarterly operating margin on commercial aircraft increased to 15.6 per cent from 11.6 per cent from a year ago, driven by higher 737 production and higher margins on its Dreamliner.
Boeing’s upbeat forecasts and full-year 2018 results — which included surpassing the US$100-billion revenue mark for the first time in its 102-year history — boosted shares 6.3 per cent to US$387.72.