Boeing Co. (BA)'s first-quarter earnings skidded 14 percent as expenses mounted, but the aerospace firm reported better-than-expected results from its military and commercial airplane businesses. That helped send the company's stock to its highest level since 2001.

Increased spending on deferred compensation and pension expenses crimped net profits, pushing them down to $535 million.

However, on a day when rival Airbus made aviation history with the first test flight of its A380 (search) superjumbo jet, Boeing still managed to impress Wall Street with unspectacular but better-than-expected results.

The bulk of gains came from the military side, where Boeing cited increased sales of its Future Combat Systems, maritime aircraft and 737 airborne early warning programs. That more than compensated for reduced deliveries of F/A-18 (search) and F-15 fighter jets.

The single-aisle 737 was the main contributor to the commercial airplane business, accounting for 54 of 70 deliveries in the quarter, although a flurry of recent orders for the planned fuel-efficient 787 wide-body jet is a prime reason for analysts' upbeat view of company prospects.

Boeing shares rose 66 cents to $59.66 Wednesday on the New York Stock Exchange (search) after reaching $60.05, their highest intraday price in nearly four years. The stock has doubled in less than two years as Boeing bounces back from the post-2001 aviation slump and continues to rake in lucrative defense contracts.

"Everything's going very well for them," said Paul Nisbet, an analyst for JSA Research. Amid a recent surge of airplane orders, "I think they'll overtake Airbus on orders, very possibly this year," he said.

The Chicago-based company said first quarter net earnings amounted to 66 cents per share, down from $623 million, or 77 cents per share, a year earlier. Excluding certain items, earnings from continuing operations were 64 cents per share — exceeding by 9 cents the consensus estimate of analysts surveyed by Thomson Financial.

Revenue was $13 billion, up 0.7 percent from $12.9 billion a year earlier.

"At first glance things looked a little messy" because of one-time adjustments, said Fitch Ratings aerospace analyst Craig Fraser. "But when you look past that stuff, the quarter was very solid. It was a good performance operationally."

Results included charges of 7 cents per share related to the disposal of Boeing's venture capital investments and the sale of its Electron Dynamic Devices (search) business, as well as a gain from tax adjustments totaling 14 cents per share.

Despite a 17 percent decline in earnings from continuing operations, interim chief executive officer James Bell said the first-quarter results signaled a "very good start" to the year.

Bell, who also remains chief financial officer, was named last month to hold down the top spot while Boeing looks for a successor to Harry Stonecipher (search). Stonecipher, who was set to retire next year when he turns 70, was forced to resign as a result of unspecified improper behavior during an affair with a female company executive.

Asked on a conference call about the CEO search, Bell declined to provide a timetable for a selection by the board of directors. He said the recent "outstanding" results are "giving them the time to do it in a deliberate fashion to make sure that they do it correctly and pick the right person."

The heads of Boeing's two main businesses — Alan Mulally of commercial airplanes and Jim Albaugh of defense — are seen as the most likely candidates for the post.

Boeing said its spending was significantly higher in part because of a $126 million increase in compensation expenses, reflecting the vesting of performance shares and the adoption of a required new accounting methodology for estimating those expenses. Bell said total costs on the plans over five years will be less but the accounting switch accelerated the recording of the cost.

The company also more than tripled its pension expense to $223 million. Bell said $68 million of that total was due to charges from the sale of Electron Dynamic Devices, with the rest of the increase resulting largely from weak stock-market results.

Boeing's defense contracting business remained prosperous. Revenues rose 2 percent to $7.5 billion — 58 percent of the company's total — and operating profits grew 15 percent to $847 million.

At least one big contract may be in trouble, however. Bell acknowledged that the Pentagon sent Boeing a letter threatening to end a $15 billion program for new radios that would let soldiers communicate with each other via wireless connections while on the move. Boeing is working on those problems, he said.

The commercial plane-making business saw revenues dip 5 percent to $5.1 billion on a decline in deliveries to 70 aircraft from 76 a year earlier. But its operating earnings climbed 11 percent to $389 million, limited somewhat by higher development spending on its planned new 787 plane.

Boeing, which has trailed Airbus in airplane deliveries for the past two years, reaffirmed its financial outlook for 2005 and 2006 and left unchanged its estimates of 320 plane deliveries in 2005 and 375 to 385 in 2006.