Commercial Sales Offset Military, Aerospace Losses

On Wednesday, Boeing reported a 29 percent improvement in profits for the first quarter of 2006 -- a better-than expected sign of the aerospace manufacturer's current success on its commercial aircraft operation. In fact, revenues from Boeing's Seattle, WA-based airplane division jumped 48 percent, thanks to 28 more aircraft deliveries than it was able to push out the door one year ago.

That surge helped offset losses from Boeing's military and aerospace divisions, according to Business Week. Those are Boeing's largest divisions -- and the company attributed the losses to a drop in sales for its commercial satellite programs, as well as launches delayed by a machinists strike last year.

"Strong overall performance, combined with a significant increase in commercial airplane deliveries, drove this quarter's results," said Jim McNerney, Boeing's chairman, president and chief executive officer.

While new aircraft sales were not quite at the level of last-year's record setting pace, Boeing was still able to book 176 aircraft orders in the first quarter -- including 54 for the 787 -- contributing to an order backlog worth $132 billion, or more than double that over the same period in 2005.

That compares to a four percent decline in earnings in Boeing's defense division. While that is a loss over one year ago, the defense side was still able to post $7.2 billion in sales in Q1 -- ahead of the $7.1 billion earned on the commercial side. Perhaps more importantly, Boeing reported gains in the operating margins on the defense side... as well as gains in the F/A-18 and C-17 programs.

Boeing also repeated its expectation to deliver 396 commercial aircraft in 2006 -- which would be a 36 percent increase over 2005 -- and the company forecasts around 445 deliveries in 2007.

While there are still over seven months left to go in 2006, we can't help but wonder: will this be the year Boeing retakes the commercial sales AND delivery crowns from Airbus? It's too soon to tell... but no matter how it turns out, it will be fun to watch.

FMI: www.boeing.com