Boeing Sees Earnings Lift, Despite Outsourcing Woes

Ann All

Back in December, I blogged about the outsourcing-related woes affecting Boeing's production of its Dreamliner 787 jets, noting that problems with suppliers led the aerospace giant to delay delivery of the first plane from this spring to November or December.

 

Boeing hoped to change the way it manufactures planes by contracting with suppliers around the world to design and build major components, which Boeing would then assemble at its Seattle factory. This approach would help Boeing reduce the projected $10 billion development costs of the Dreamliner. Yet a lack of transparency into suppliers' processes, as well as cultural misunderstandings, caused problems.

 

So have Boeing's earnings suffered? Surprisingly, no. As Forbes reports, the company delivered first-quarter earnings of $1.2 billion, or $1.62 share, handily beating analysts' estimates of $1.35 a share. That's a 38 percent increase from last year's Q1 earnings of $1.13 a share. Boeing says it also expects to beat estimates for the year.

 

The strong performance was buoyed by the 289 orders for commercial planes Boeing booked during the quarter. The number was a surprise, considering the problems bedeviling the airline industry, most notably rising fuel costs.

 

Still, notes MarketWatch, Dreamliner-related concerns remain. Because of the delays, Boeing is projecting R&D costs of $3.6 million to $3.8 million, more than its original estimates of $3.2 billion to $3.4 billion.



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