Strong travel demand lifts Boeing in first quarter
DALLAS (AP) – The desire by people to see the world is giving Boeing a huge lift, and executives at the aircraft maker say travel is a long-term growth industry.
After all, they reason, only about one in five people has ever flown on a plane, so there is plenty of upside to keep building them.
Airline profits remain healthy, and through February passenger traffic was up nearly 6 percent from a year ago, Boeing executives said Wednesday as they announced first-quarter earnings and revenue above Wall Street expectations.
The Chicago company also raised its profit forecast for the full year. Boeing shares were up 12 percent since the start of this year and 79 percent in the past 12 months as of this morning. They climbed another $5.12, or 1.6 percent, to $334.18 in midday trading.
Boeing has a backlog of 5,835 airliners valued at $415 billion – although airlines usually get big discounts. That’s enough to last several years if the company never won another order. This month it got a twin boost when American Airlines ordered 47 more of its 787 Dreamliner jets and Hawaiian Airlines signed its intent to buy 10 of the twin-aisle planes for international routes. The airlines’ decisions were a setback for Boeing European rival, Airbus.
Boeing said first-quarter profit rose 57 percent to $2.48 billion. Excluding non-repeating gains, the company said core earnings were $3.64 per share, easily beating analysts’ prediction of $2.59 per share, according to Zacks Investment Research.
Revenue grew 6 percent to $23.38 billion on delivery of 184 commercial planes.
Boeing’s defense segment also gained ground, winning an initial contract from Kuwait for 28 F/A-18 fighter jets among other international deals.
CEO Dennis Muilenburg said the results and an upbeat market outlook gave the company enough evidence to raise its prediction for full-year core earnings by 50 cents per share, to between $14.30 and $14.50 per share. Analysts surveyed by FactSet were looking for $14.11.
Investors were rattled earlier this month when talk of a trade war between the U.S. and China escalated. Boeing shares tumbled because tariffs could raise the price of metals used in planes and, more ominously, major exporter Boeing could be an easy target for Chinese retaliation.
Jim Corridore, an analyst for CFRA Research, said tariffs are unlikely to hurt Boeing much because “China has a huge need for aircraft which cannot be filled by other manufacturers.”
Muilenburg has cultivated a relationship with President Donald Trump since Trump ripped the company in December 2016 over the cost of new Air Force One jets. The CEO said on a conference call with analysts and reporters that he was optimistic the U.S. and China could settle their differences over trade.
“This is not a surprise to us,” he said of the dispute. “We operate in a global environment. We have to deal with these kinds of issues continuously.”
Muilenburg added that Boeing still hopes to open a new jet-assembly plant in Zhoushan, China, by the end of the year.