CHICAGO – Boeing Co chief executive Phil Condit said on Monday it was still possible for the world's largest commercial airplane maker to have 2002 earnings higher than those that will be posted for 2001.
Boeing initially gave that outlook earlier this year, and it is sticking by the comments at least for now, despite announcing last week reduced jet delivery forecasts and plans for major layoffs.
According to Thomson Financial/First Call, which tracks earnings estimates, the consensus for Boeing's 2002 earnings is 3.44 per share, while 2001 is pegged at 3.64 per share.
In 2000, Boeing earned $2.84 per share on revenues of about $51 billion, according to First Call, or $2.44 on a diluted basis, according to Boeing. First Call puts the 2003 consensus at $3.50 per share.
Condit told reporters at a press reception at the new Boeing world headquarters here that the higher earnings are still possible even though the commercial airplane business is going through a significant downturn and all U.S. airlines are under tremendous financial pressure.
Chief financial officer Mike Sears cautioned that ``we don't have a good enough handle on how far commercial (airplanes are) going to go down'' and said the 2002 outlook will depend on what happens.
Boeing cut its jet delivery forecast last week, saying it expected to deliver about 400 jets in 2002 from an earlier estimate of 510 to 520. It has not given 2003 projections.
Like others scrambling to forecast travel demand in a time of incredible uncertainty, Boeing is looking for clues where it can. The company last week said it would lay off 20,000 to 30,000 workers by the end of 2002 to cope with the downturn. No charges to earnings are foreseen because of that action, Sears said. Some workers could be recalled if needed.
GULF WAR USED FOR GUIDANCE
Condit said the company is using the Gulf War as a benchmark of sorts to try to figure out when demand for air travel will pick up. It took about a year for travel to return to levels prior to the Gulf War, he said. In the following period, Boeing lost about 500 deliveries of commercial jetliners, Condit said.
He estimated about 900 airplanes would be parked because of excess airline capacity in the face of sharply lower demand for travel following the crashes of four hijacked planes on September 11 which killed all aboard and thousands more in New York's World Trade Center and the Pentagon (news - web sites).
Condit said Boeing's military business could potentially offset the downturn in commercial jetliners, but declined to be specific on potential revenues or earnings gains.
Among Boeing military products that could be needed in the near term are C-17 planes, tankers and satellites, Condit said. ''There's a range and they're all in play,'' he said.
Regarding the likelihood Boeing would win the coveted Joint Strike Fighter contract, so far still set to be awarded October 26, Condit said: ``We intend to win.''
Boeing is competing with No. 1 U.S. defense contractor Lockheed Martin Corp for the winner-take-all next generation fighter plane that is worth an initial $200 billion and perhaps up to half a trillion dollars.
Boeing Capital Corp is talking with a lot of airlines about the potential for lending financial help, but only when it makes sense from a business standpoint, Sears said, adding, ''We're not going to keep airlines afloat.''
While it is still too early to tell how travel will pick up, Condit said so far ``there appears to be a recovery at this point from a very deep hole.'' The worse case scenario for Boeing going forward would be if there were a series of attacks that continued to depress travel demand, he said.
There are still airlines taking deliveries of planes, Condit said, but Boeing is closely monitoring daily traffic flows. If travel remains depressed, airlines can ``go through cash very fast,'' he noted.
Condit said he never expected Boeing jets to be used as a weapon of destruction as they were on the Trade Center and Pentagon. ``That was one of the hardest parts for me, watching that event,'' he said.
Boeing has its own special intelligence gathering personnel who are helping in the government's investigation to ferret out those responsible, Condit added.