Fri, Apr 10, 2009
Issues Early Caution On Q1 Earnings
Ahead of the release of its
first-quarter results on April 22, Boeing announced Thursday it
will scale back its twin-aisle airplane production plans for 2010
due to "significant deterioration in the business environment for
airlines and cargo operators driven by unprecedented global
economic conditions."
Monthly production of the 777 will decline from seven to five
airplanes per month beginning in June 2010. Boeing will also delay
previous plans to modestly increase 747-8 and 767 production. No
changes are being made at this time to production rates for its 737
narrowbody, Boeing's most popular aircraft model.
In a carefully-worded release, Boeing stressed the cutbacks
"solely reflect delivery deferrals requested by customers in
response to unprecedented declines in global passenger and
air-cargo volumes," and are not due to any cancellations recorded
so far this year.
Boeing also admitted its first-quarter net earnings will take a
hit due to "production decisions and unfavorable price escalation,"
to the tune of 38 cents per share. So far, the bulk of the
losses come from the 747 program.
"Because the 747 program is currently in a loss position, the
reduced earnings associated with the factors above will be recorded
for most units in the 747 backlog," the planemaker stated. "That
impact, somewhat offset by a refinement in cost estimates, accounts
for approximately $0.31 per share of the first-quarter charge. For
the other commercial programs, the impact will be reflected in
lower margins on deliveries as they occur, including an estimated
$0.07 per share net earnings reduction in the quarter."
"These are extremely difficult economic times for our
customers," said Boeing Commercial Airplanes President and CEO
Scott Carson. "It's necessary to adjust our production plans to
align supply with these tough market conditions. We are in close
contact with our customers as we continue to monitor this dynamic
business environment."
Boeing's states its commercial backlog of more than 3,500
airplanes "remains strong and well-diversified in terms of airplane
models, geography and customer business models."
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