1Q 2009 results

We’ve just been through another tough quarter, not only for Boeing but for our industry. So, understandably our results are somewhat parallel to what’s happening in the global economy and its deep effects on the commercial airplane market.

Boeing’s first-quarter earnings dropped 50%, to $610 million. This is a reflection of the financial effect of our recent announcement that we’ll reduce 777 production rates in the middle of next year and delay planned modest increases in 767 and 747-8 production. However, company revenues increased 3%. This is partly a result of the 5% increase in commercial airplane deliveries compared to the same period in 2008.

While our business outlook may be clouded by global economic woes, generally speaking our production programs are executing well, our development programs are making progress, and our commercial services business are generating strong earnings.

During our earnings call, Boeing Chairman and Chief Executive Jim McNerney updated everybody about recent progress on the 787 Dreamliner program:

  • First flight remains targeted for later this quarter
  • Systems, including the engines, are cleared for first flight
  • Structural testing on the static airframe is complete

Earlier this week, we completed the full simulation of first flight using the actual airplane. Airplane #1 will shortly move out of the factory to the flight line. There, it will be fueled and its engines operated prior to a final systems check and high-speed taxi tests. We’re also making progress on airplane #2, on which we’ll conduct ground vibration tests before first flight.

So, clearly the Dreamliner program is moving in the right direction. Our 787 backlog remains strong - 886 orders from 57 customers around the world - and we’re confident in the long-term value of the 787 for our customers.

On our other major development program, the 747-8, we’re making progress toward delivering the first freighter (3rd quarter, 2010). Assembly work on the first 747-8 Freighter is approximately one-third complete.

photo
photo

Progress continues on the 747-8 Freighter, as these images depict better than words. We’ve completed major assembly of the first set of wings.

As for the 747-8 Intercontinental, engineering is proceeding as planned. However, we announced today an adjustment in the schedule for the Intercontinental. The first passenger model is now expected to deliver during the 4th quarter of 2011 rather than the 2nd quarter of 2011 because of the softening freighter market and our resulting decision to delay a planned the increase in 747 production.

photo

The new 135-foot 3-inch (41.2 m) wings for the 747-8 incorporate the latest aerodynamic technologies to fly farther and more efficiently with an advanced airfoil for improved performance and fuel capacity.

On the general state of the industry and our company, let me summarize what we heard during our earnings call. Boeing remains a solid company with strong core businesses. But we face a difficult market environment - like all companies - in a global economy that’s more challenging than many of us have ever seen.

The economic and market pressures on our customers are clear, and these in turn impact our business. We’re continuing to step up our competitive and productivity efforts to manage costs, and as we’ve discussed here before, this unfortunately means layoffs throughout Boeing.

Our overall commercial backlog remains strong, and we continue to work with our customers to help them deal with the economic uncertainties and to deliver the airplanes they’ve purchased, on a schedule that meets their needs.

As we heard today, these are unprecedented times. But we’re managing our costs and investments, and we have a strong backlog and strong products and services. Boeing has a solid foundation from which to work through this.

Comments (7)

Paulo M (Johannesburg, RSA):

Well, Ladies and Gentlemen, there they are - the highest sweep wings at this end of the industry!

Can't wait to see them fully fitted out. ;)

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I think the best that you can do in the current environment is execute your investments, manage costs and keep your company profitable as best you can. Do what you do best.

Chris C (South Africa):

Wow, those -8F’s wings are spectacular! Thanks for sharing these fantastic photos! Steadily, the dream of a 21st Century 747 is becoming a reality! The 747-8 is going to be a seriously impressive, sleek, modern and efficient looking airplane, and with it offering the best economics in its class, the 747-8 is going to be the shape of the future, period. When the upswing begins, the 747-8F and -8I will be the airplanes that help drive the markets to recovery. But, once again, these are really neat photos, thank you!

A note on the single 747-8VIP order cancellation today; Considering the airplane itself costs in the region of USD$300-million, excluding the lavish, exquisite interior that’s too be installed, in these extremely unprecedented bad global economic times, it’s fully understandable that a/or client(s) are no longer able to afford the ultimate business jet.

When it’s all said and done, a -8VIP airplane could cost up to a staggering USD$500-million, and that’s one hefty price tag! But, with 7 firm orders for the 747-8VIP (9 gross orders), this airplane offers the ultimate in air-travel. Another factor to consider is that these clients only demand the pinnacle of airborne excellence in VIP business jet travel, and for the -8VIP to have secured so many orders; it truly speaks volumes on just how phenomenal the new 747-8 really is.

I’m confident that cancelled -8VIP orders will be re-ordered in months or a few years to come, with many more additional new -8I and -8VIP orders to follow as well. It’s an incredible airplane.

Boeing 787 (Long Beach, California, United States):

Though the times are tough for the industry, seeing the first large components for the new 747-8 brings hope and inspiration to the people working for Boeing and for the industry as this in the first of over 100 new 747s for the now slow order paced 747 line.

Alexandar (oakland, CA):

Boeing at one time proposed the Sonic Cruiser. Can the new -8I fill the blank. Given its high wing sweep, and if customers are willing to pay a little bit more for fuel, can it be made to fly near the Sonic Cruiser speed?

The 747-8 Sonic Cruiser! That will be something that can make the A380 bite the dust.

Also given the more delay, will Boeing consider more drastic change to use the crown space?

Alexandar (oakland) (oakland):

Assuming premium traffic will be well served by 787 and VLA's main future will be for mass transit, can the 747 economy section ceiling be lowered to accommodate 3-3 configuration in the crown space? Another 100 seats can make 747-8's CASM or RASM untouchable.

Tim (Baltimore):

If I were a billionaire I would buy a few 747-8I's and I don't care what some people would say of the 747 design as a " old frame " ..... " old design " SO WHAT !!!
Some people have knee jerk reactions, or " go with the wind or the next fad ... they are looking for glitzy things.
The 747-8I is new !!
Hey how about if GM were to make a modern Corvette design of the famed 1950/early 60s Corvette ?
People would love it.
It's just some people have nothing better to do with their time then to be critical of the 747-8I.
It's a well proven reliable trusted 747 design ( just like the B-52s ) .....
A 747-8I built with modern computer software and the whole design of the 747-8I/F in digital is ? well MODERN !!!
Lufthansa must know something about the finer details of the 747-I that these so called " Critics of the 747-I " know....
Randy I have a good gut feeling, that once this plane is on it's first test flight or after put into service, orders will be flooding in...
One thing that the " critics " of the 747-8I leave out ( must be A-380 fans ) is the A-380 is limited in what airports if can take off and land in and the 747-8I can land and take off in ALL airports that the 747-400 can !!!

hamilcar (Philippines):

One way to lower the ceiling of the economy section without lowering its quality is to raise the seat height a few inches while add a few inches to the leg room(the concept: the subsequent loss of number of seat in the economy section by increasing the leg room is covered by the seat gain in the crown space)so that the under-the-seat space in front of each seat becomes a cabin for hand luggages, which eliminates the overhead luggage bins, which lowers the ceiling(and lessens overall weight).

My personal feeling: It's a lot easier and more natural to simply drop your luggage into the space in front of you than struggling to weight-lift it up into the overhead bin. (especially for shorter people).

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