First half

As you’ve probably heard or read today, Boeing announced its second-quarter 2008 financial results today. Clearly we had some challenges last quarter, and that’s reflected in our results.

On the defense side we had the previously announced charge for the AEW&C program.

For Commercial Airplanes we had operating earnings that were lower than this period a year ago. We had a different customer and model mix in our deliveries, some customer introduction costs, and airplanes that were sold a few years ago in a more aggressive pricing environment. Also, our other airplane programs had to absorb some costs that would have been absorbed by the 787 program had we been delivering Dreamliners this year.

While the business environment for our customers – and for us – remains challenging, we had some good performance. In the second quarter we delivered 126 commercial airplanes to our customers – an increase of 11% over 2Q 2007 – and we’re on track for between 475 and 480 deliveries by the end of 2008.

In 2009 we expect to deliver between 500 and 505 airplanes, with a higher total expected for 2010, as 787 deliveries ramp up.


Among a number of milestones this past quarter, we debuted the new 777 Freighter, the world’s most capable twin-engine cargo airplane.

Our Commercial Airplanes backlog is at a record $275 billion, an amazing number. Our challenge is performing in a rather uncertain market.

One thing in particular we’re looking at is the financial market for commercial airplanes. Boeing Capital Corp. (BCC) keeps watch on the global capital markets to make sure our customers have access to efficiently priced capital from third-party sources.

We work hard with financiers to help them understand the investment value of Boeing’s products. We’ve been successful in that area, which is why we haven’t had to directly provide financing in several years.

But based on what we’re seeing, we may need to again help customers with financing - most likely those in the U.S. If we do, as our top executives said today, we’ll do it in a prudent manner with the aim of returning financing into the third-party market when that improves.

Overall we still see strong demand for airplanes. We have a highly diversified backlog, both geographically (90% outside of U.S.) and relative to customer business model.

Without question this industry is grappling with significant challenges. We stand ready to assist our customers, with our efficient airplanes, great service offerings, and financing if that becomes necessary. We’re with them every step of the way.

Comments (9)

Norman (Long Beach, California, United States):

This quarter has been difficult for Boeing, but Boeing is still making money and few manufacturers are making money. Even though the US market is very small at this point due to the sudden rise of fuel prices and a seemingly perpetual bear economy, at least the economy of China and the Middle East has been on a roll, and that has been good for Boeing.

The rise in deliveries is something to look forward to and when the 787 Dreamliner comes into production the net total delivery rate will be something to behold.

Chris C (South Africa):

Boeing Commercial Airplanes certainly achieved some special milestones in Q2 2008. As highlighted, the formidable 777 Freighter had its successful debut, the super-efficient 787 Dreamliner successfully completed Power On, the 3rd 787 flight test airplane entered final assembly with significantly less “travelled-work”, the first 767-300BCF was successfully delivered to ANA Cargo, and 126 airplanes were delivered in Q2 whilst 187 new orders in the same time period were booked.

For me, however, the most exciting achievement for BCA in the Q2 was the announcement by Arik Air that they intended to purchase 3 phenomenal 747-8Is! Whilst strictly speaking their latest announcement to purchase 4 firm plus 1 option of the efficient -8I (and configure it to a 5 class seating arrangement) at the Farnborough Airshow falls within Q3, it nevertheless was initiated in Q2. Wishing you the best in securing many more orders over the coming months for the new, advanced 747...the airplane certainly is the lower risk, higher reward approach in the ultra-large airplane market.

Roger Wallace (Palmdale, CA , USA):

I wish Boeing upper level management would pick another term to represent progress other that "We have Challenges". Challenges to me means Production problems, increased costs, reduced profitability and schedule delays. As a strong Boeing Stock holder who has seen his Savings plan assets diminish by over $120,000.00 over the past seven months, I shudder every time that term is used. I don't think we need to share every little problem with the public unless it has a direct impact on the delivery schedule.

Jon Grams (Colorado Springs, CO 80919):

This may be a little off topic, but a lot of us 747-8I fans out here are understandably concerned about the relative "quiet" on the intercontinental front. Of course the Arik Air Letter of Intent for 4 aircraft is great news (assuming that is firmed up), But recent comments about "A380 future efficiency gains threatening the 747-8I" by EK's Tim Clark are troubling, especially as EK has been openly interested in the -8I for so long. We can only hope that ANA and China Airlines give the -8I some more orders. NW/Delta would be a great customer as well. I know I've got my fingers crossed!

Mike Franco (Seattle):

We need to continue to publicly share the good and the bad of how things are going. Boeing can and always does recover from the difficulties we face. We need to be extremely sensitive about our credibility in the market place of opinion. As bad as missed schedules may be, it is worse to mislead about our schedule performance. When we know, we need to be right up front. Integrity doesn't recover well or quickly.

Bob (Kailua-Kona, Hawaii USA):

I'm a "minor" shareholder, and cheering for you all the way! Would love to here more about the new 747-8. Amazing plane, along with the 787. I think you guys have done an amazing job of judging the keep going, and let us see some more stuff on 747-8 and 787, KEEP THE EXCITMENT GOING!

Duc (Halle, Sachsen-Anhalt, Germany):

yeah, a difficult beginning for a brighter future.
This quarter witnessed a lot of ecomomic problem. And BA was also affected. But in the next quarters, BA is going to research and improve 777 family, make the first deliveries of 787 and 747-8I. So, I wish BA will have several fantastic plans with more and more orders and deliveries, as well. And finally, BA will have a good financial result.

Paulo M (Johannesburg, RSA):

While the financial results are somewhat disappointing, I think Boeing has managed the impact of the 787 delays fairly well. The company has a good product mix that is delivering in tough market conditions.

Boeing 747-8 Intercontinental:
There really has been a lack of information on this plane. But since the launch is so close to the revised A380 schedule, there probably are good reasons for that.

One thing I find - or rather don't find - is information on the 747's cabin - in terms of floor area - or even dimensions for the upper deck floor. So, I did a little number crunching and these are my results: the 747-8 will have a cabin floor area of around 450-square meters (~4844 sq ft.). Wing area for the 747-8 should be around 550 sq m - with the new lightweight winglets. (Rough estimates)

The A380-800 has a wing area of 845 sq m and a cabin area of 547 sq m.

Now, whatever seating arrangements Boeing and Airbus agree to disagree on, the A380-800 has around 25% more wing area per cabin floor area. That's more weight.

While the A380 makes use of the latest materials and manufacturing techniques, it's obvious that Boeing will cut into this advantage by also using some materials gleaned off the 787 effort. There is absolutely zero question as to the fact that Boeing will deliver a very advanced, capable and modern aerofoil.

I think, the 747-8I is intended to be the best possible replacement for the upper edge of the 747-400's market - not so much an A380-800 competitor overall. I also think that that wing will be a huge advantage to the A380-900 - which is still further off the 747's market bracket.

D.Yang (Appleton, WI, USA):

I noticed that the Dreamlifter arrived at EAA this past monday, any chance of a larger Boeing presence at future EAA airventures? Even though most of the spectators are not potential customers for a 747, it's always great to see the work of our nation's aircraft builder.

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