Boeing Reported First-Quarter Profit Down 9 Percent due to a $156 million charge for the KC-46 program, and a $70 million pretax charge for its 747 program. The U.S. Air Force aerial refueling tanker program is over-budget and behind schedule, while the weak air cargo market has slowed sales of the jumbo jet freighter. Earnings fell to $1.22 billion, from $1.34 billion a year earlier, but first-quarter revenue increased 2 percent to $22.6 billion.
Boeing still forecasts that its full-year profit and revenue will match 2015 and it is confident that other parts of its business would make up for the added expenses. The defense business was better than last year’s first quarter. Chief Executive Officer Dennis Muilenburg said, “Higher year-over-year deliveries of military aircraft and continued solid operating performance on core production programs drove revenue growth and strong cash flow for Boeing in the first quarter.”
Boeing did not report a 787 charge and said the program’s deferred costs rose by only $141 million to $28.65 billion, less than prior quarterly increases, but still the hole deepens. Commercial Airplanes first-quarter revenue decreased to $14.399 billion on 4 percent lower delivery volume of 176 aircraft. First-quarter operating margin was 7.2 percent. In the previous year, revenue was $15.381 billion, and the operating margin was $10.5 percent.
Earnings from commercial operations fell 36 percent to $1.033 billion from last year’s $1.617 billion. Commercial Airplanes booked 121 net orders during the quarter. Backlog remains strong with over 5,700 airplanes valued at $424 billion. In the first quarter of 2015, Boeing sold 116 aircraft, so sales this year are still strong, but some of those new sales were order changes to different types, which allowed at least one customer to delay delivery. In January, Mr. Muilenburg said Boeing will build between 740 and 745 commercial jets this year, down 20 from the 762 delivered in 2015, and the high-value 747 and 777 wide-bodies will be most affected. Expected revenue and cash flow for the year will drop accordingly. Boeing will build several flight test 737 MAXs this year, as well as the first production versions that cannot be delivered to customers until certification in 2017.