Boeing Posts a Loss After Hefty Charges

SEATTLE – Boeing Co. (BA), battered by the slump in the airline industry and a $1.1 billion charge in its satellite business, on Wednesday reported a net loss for the second quarter and cut its 2004 revenue and profit forecasts.

The world's largest aircraft maker also trimmed its forecast for commercial jet deliveries next year and repeated a warning that demand from struggling airlines is not likely to recover before 2005.

Boeing said it lost $192 million, or 24 cents per share, in the second quarter, its second straight quarterly net loss. But the results were much better than expected. Analysts' average loss estimate was 43 cents a share, according to Reuters Research, a unit of Reuters Group Plc.

Excluding its satellite unit, Boeing's military and space division, the No. 2 U.S. defense contractor and a major supplier to the U.S. space agency, posted generally strong results.

"They haven't totally turned the corner. These results are mixed and it's going to be a tough third quarter," said analyst Steve Mather at Sanders Morris Harris.

Second-quarter revenue fell to $12.79 billion from $13.86 billion a year earlier, reflecting a slump in jetliner sales. Airlines have delayed or canceled hundreds of jets on order, and several carriers have declared bankruptcy.

But Boeing rival Airbus SAS (search) has built a larger order backlog and expects to deliver more jets than Boeing for the first time this year.

Boeing cut its forecast for commercial jet deliveries in 2004 to a range of 275 to 290, from a prior estimate of 275 to 300. It said it had booked firm orders for 90 percent of those projected 2004 deliveries, or about 248 aircraft, and was on track to deliver 280 jetliners this year.

Boeing delivered 381 jetliners last year and 527 in 2001.

The Chicago-based company shaved its 2004 revenue forecast to $52 billion from a previous range of $52 billion to $54 billion. The cut reflects weak commercial jet sales, reduced revenue from spare parts and services, and weakness in the commercial satellite and launch market.

Along with the reduced revenue forecast, Boeing cut its 2004 profit outlook to a range of $1.75 to $1.95 per share, from $2.10 to $2.30.

757 Program Under Scrutiny

Boeing officials said they may have to decide whether to shut down the 757 (search) program, already reduced to one aircraft a month, in a year or so if the mid-sized jet fails to add to its backlog of just 18 orders.

A shutdown would result in a charge of about $200 million, cutting net profit by perhaps $100 million, but several current sales campaigns could keep the line going, they said.

Officials said the outbreak of Severe Acute Respiratory Syndrome (search) had dampened travel demand and aircraft orders from Asia.

Still, anecdotal signs of improvement suggest the end of the slump is nearing, though U.S. airlines remain particularly weak, Boeing Chairman Phil Condit told reporters and analysts on a teleconference.

He cited traffic data around world, especially "the rebound that began in the middle of June in the Asian carriers and watching traffic come back in Asia."

The special charges in the second quarter at Boeing's defense and space unit, which reduced profits by $693 million, or 87 cents per share, reflected persistent problems in the satellite-making unit and a lack of demand for commercial satellite launches by its Delta IV rocket (search) program.

Boeing's military aircraft and weapons business saw profits grow even as revenue fell 4 percent to $2.5 billion.

For the 2003 first quarter, Boeing reported a net loss of $478 million, including one-time charges. For the 2002 second quarter, it posted a profit of $779 million, including one-time gains.

Boeing's Seattle-based jetliner unit last week said it would fire up to 5,000 employees, adding to the 35,000 jobs already cut since the Sept. 11, 2001, attacks on the United States.

Boeing shares recovered from an early drop to end 12 cents higher at $32.69 on the New York Stock Exchange.