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Originally published July 27, 2011 at 4:54 AM | Page modified July 27, 2011 at 10:36 PM

Boeing 2Q profit beats Street; raises guidance

Boeing's profit surged almost 20 percent in the second quarter as it delivered more passenger planes. It raised its guidance for the year.

AP Business Writer

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Boeing's profit surged almost 20 percent in the second quarter as it delivered more passenger planes. It raised its guidance for the year.

Boeing Co. also said on Wednesday that it will not deliver as many of its new 787s and 747-8s this year as previously hoped. Investors seemed content to hear that delivery of the first planes remains on schedule - Boeing shares rose slightly.

Analysts believe Boeing and other plane builders are at the beginning of another boom cycle after enduring a recession. Airlines have been ordering so many Boeing 737s and competing single-aisle planes from Airbus that the companies are raising production rates. Boeing already cranks out one 737 every day. It's aiming for 42 per month in 2014.

Boeing earned $941 million, or $1.25 per share, in the quarter. Revenue rose 6.2 percent to $16.54 billion. Analysts surveyed by FactSet had predicted net income of 98 cents per share on revenue of $16.47 billion.

"Boeing had a very strong quarter, far better than estimates," Barclays Capital analyst Joseph F. Campbell, Jr. wrote.

Boeing delivered 118 planes during the quarter, four more than a year ago. Revenue from commercial planes rose 19 percent to $8.84 billion. Operating profit from commercial planes jumped 35 percent to $920 million.

In addition to more deliveries, Boeing benefited from a shift toward higher-priced planes. The 737 has a list price of around $80 million. It doesn't make as many of its big 777s, but they sell for three times as much. Boeing delivered 19 777s during the quarter, three more than a year ago.

Boeing now expects to deliver 485 to 495 planes this year, five fewer than previously predicted. That reflects fewer expected deliveries of the long-delayed 787 and 747-8. Boeing said it expects to deliver both "later in the third quarter," which ends Sept. 30.

Boeing now expects to deliver a combined 25 to 30 of the planes, down from 25 to 40. Boeing had firm orders for 827 of the 787s at the end of the quarter. It is trying to speed up 787 production in both Everett, Wash., and at a new factory in North Charleston, S.C., which is set to finish its first plane early next year.

At the same time, Boeing is raising 737 production to fill a backlog of more than 2,100 orders. It has said it will make a version with a new engine, matching a competing offer from Airbus. Boeing says its new-engine 737 should be at least 10 percent more fuel efficient than current 737s. Earlier this month American Airlines said it would buy 100 of the new 737s if Boeing builds them.

Boeing is still deciding where to build the 737s, Chairman and CEO Jim McNerney said on Wednesday. Current 737s are built in Renton, Wash., and the new-engine planes may be built there, too, he said. North Charleston is also a possibility, although the plant there needs to ramp up to build the 787 and adding the 737 could dilute those efforts, he said.

"It could be an option down the road ... but it's not at the top of the list right now," he said.

Boeing is currently fighting a complaint from federal labor regulators that it illegally retaliated against strikes by opening the plant in South Carolina, where labor laws make organizing more difficult. McNerney said there's "zero" connection between the National Labor Relations Board case and Boeing's decision on where to build the new 737.

Boeing raised its 2011 outlook to $3.90 to $4.10 per share, up by 10 cents on the high and low ends. Analysts had been expecting $4.12 per share.

Revenue in Boeing's defense, space, and security business fell 4 percent to $7.69 billion. Operating profits rose 12 percent to $798 million. Boeing has been cutting costs in its defense unit to offset a slowdown in U.S. and overseas defense spending.

Shares of Chicago-based Boeing Co. rose 48 cents to close at $70.64.

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