3Q 2007

The Boeing Company released our results for the third quarter today. On a number of levels it was an outstanding quarter. And I think that our well-publicized challenges ought to be viewed in the context of the big overall picture.

Performance company-wide is up, with revenues that were 12% over the third quarter of 2006. The total backlog for our company is a record $295 billion, a 29% increase over the past 12 months.

For Commercial Airplanes, we noted here a couple of weeks ago that game-changing innovation is not easy. And the planned initial deliveries of the 787 Dreamliner have been delayed by 6 months - now expected to begin in late November or December 2008. The first flight is anticipated around the end of the first-quarter of 2008.

As you may have read, Pat Shanahan has returned to BCA to lead the 787 program, and the entire team is focused on the new schedule. Pat has managed complex programs such as Global Missile Defense and the 767-400ER. I last worked with Pat when he was leading the 757 program. He’s a fantastic choice to lead the 787 into production.

For me, I’ll also have the opportunity to work closely with Mike Bair as he moves into a new challenge at the lead of our business strategy and marketing function. Mike’s leadership of the 787 program helped make the Dreamliner the best-selling new airplane launch in history, and his expertise will help us take the right steps in developing future products, services, and strategy.

As for BCA performance overall in 3Q, it continued strong: 109 airplanes delivered, with gains in Commercial Aviation Services revenue as well, driving BCA revenues up 23% over third-quarter 2006.

We booked 354 gross orders in the quarter, bringing our total unfilled orders now to more than 3,000 airplanes. We had 903 gross orders in the first 9 months of the year. And our Commercial Airplanes backlog is now valued at a record $224 billion.

As Scott Carson told BCA employees today, clearly, we’re at a crucial stage right now. But our performance continues to be strong, and we’ve got the tools to accomplish the challenging jobs ahead.

Comments (4)

Duncan Mok (Franklin, TN):

With overall unfilled orders growing so fast, are there efforts underway to increase delivery capability for the non-787 production lines? I think particularly of the 737 and 777 lines. Is it a challenge to balance the strong focus on 787 launch and delivery against increasing deliveries for older lines?

Carl Dunn (Philadelphia, PA):

Recently I viewed a program called "Nova" which discussed solar panels which were supplying 50 to 100% of the electricity during the day for a grocery store called Whole Foods. The cost of electricity during the day is high...30 cents per unit whereas at night it is 7 cents per unit. My question is why aren't we at all Boeing plants utilizing this method which coincidentally is "green" and would reduce costs and increase shareholder's value?

-----------
Carl,

Boeing is committed to continuously reducing its environmental footprint and as a result we're very interested in reducing energy usage and finding more sustainable alternative energy sources. We are indeed investigating solar opportunities for suitability at our facilities.

- Randy Tinseth

JMS (Central USA):

No one ever said that this was going to be easy. Methinks that part of the problem is the 'can-do' attitude has prevailed over reasonable discussion for some time. It was like Boeing saying, 'we know what we're doing, just watch, you'll marvel.' So, you think that you can backtrack now on the confidence?

The main demonstration to date shows that the form could be realized which, assuming the analytics hold up, will fit the function (apologies to Blake Emery). Yet, we all know that it was an empty shell that was shown.

Perhaps, we on the outside don't need to know the details as much as we think that we do. However, we all look to Boeing for leadership due to its past successes in this type of endeavor. But, it's a new game, as you say, so the basic attitude ought to reflect that (perhaps, lean toward science and engineering rather than rah-rah business).

This program touches so many disciplines that it'll be a case study from numerous angles. Some of that review is already happening.

Now, the flying will bring forth its own issues. We're all waiting to see this.

The most recent announcement has the disclaimer that ought to have been there from the beginning. Too, though, put the disclaimer into practice in your reports. Who is asking for an exhibition of prophethood (or other type of seer) here? We want to know the problems (to the extent allowed) and more adult-like reflection on the whys and wherefores.

Okay, some of that has been done. Evidently it was not enough, as who knew the shell on 7/8/07 was empty and wouldn't fly (for how long?)?

What confidence can we put into any future pronouncements?

Chris C (South Africa):

Boeing’s Q3 results are very healthy and solid indeed! Of course the disappointment of re-scheduling of the 787 will cause an impact for Boeing, but the fact remains that Boeing build the finest, and most preferred commercial airplanes in the world. Boeing should indeed be very proud of their performance in many, many areas, but now Boeing needs to keep to its commitments and deliver as promised on all programmes, which I have no doubt you will. There are very exciting times ahead for Boeing, not only with the super-efficient 787 Dreamliner, (which I agree will sell near the 3,000mark over its life-time), but with the 777F and of course the phenomenal 747-8! Further, it is humbling to read about Boeing’s relief efforts for California after those devastating fires.

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