Revenue from increasing deliveries of commercial aircraft boosts Boeing's 4Q profit 19 percent

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In this Dec. 16, 2014 photo, workers walk near an engine of a Boeing 737-800 airplane being assembled at Boeing's 737 facility in Renton, Wash. Boeing reports quarterly financial results on Wednesday, Jan. 28, 2015. (AP Photo/Ted S. Warren)


DALLAS — Boeing Co.'s fourth-quarter profit rose 19 percent as demand for commercial airliners trumped weakness in its defense business.

Investors looked past a muted outlook for 2015 earnings and sent the shares to a 52-week high on Wednesday.

Chicago-based Boeing and European rival Airbus have prospered as airlines around the world have gone on a shopping spree, helped by rising demand for travel and cheap financing. Boeing has an 8-year order backlog for nearly 5,800 planes valued at $440 billion.

The recent plunge in oil and jet fuel prices has narrowed the advantage that airlines get from buying new, more fuel-efficient planes. In December, Air France-KLM said that lower fuel prices were a factor in delaying delivery of new planes.

Boeing CEO James McNerney dismissed the notion that cheap fuel could undercut his company. He said airlines get other benefits from new planes, including lower maintenance costs and more comfort for passengers. McNerney said sales are more closely tied to airline profits — and those are booming — than to oil prices.

Boeing expects to deliver 750 to 755 commercial jets this year, up from a record 723 last year.

Cheaper fuel won't cause airlines to delay orders or deliveries, but the rising dollar might, said Canaccord Genuity analyst Ken Herbert.

"Fifty percent of the backlog today is with European and Asian carriers," Herbert said. "As those carriers continue to see softening in their currencies relative to the dollar, those planes get more expensive."

For the fourth quarter, Boeing reported net income of $1.47 billion, or $2.02 per share, compared with $1.23 billion, or $1.61 per share, a year earlier.

Excluding volatile pension-funding obligations, Boeing said that so-called core earnings rose to $2.31 per share. Analysts expected $2.11 per share, according to a FactSet survey.

Revenue rose 3 percent to $24.47 billion, also beating FactSet's forecast of $23.93 billion.

The company said that adjusted earnings this year will be between $8.20 and $8.40 per share, below analysts' forecast of $8.66 per share. It expects revenue of $94.5 billion to $96.5 billion, beating Wall Street's view of $93.25 billion. Analysts said the company is known for cautious forecasts.

Stepping up production rates to meet demand, Boeing delivered 195 commercial jets in the fourth quarter, up from 172 a year earlier. Revenue for commercial planes grew 15 percent in the fourth quarter, led by rising deliveries of the classic 737 short-haul plane and Boeing's newest model, the 787 or Dreamliner, a long-range jet designed to be lighter and more fuel-efficient.

Boeing said that a measure of early costs for the 787 rose nearly $1 billion in 2014, to $26.1 billion, indicating that Boeing is still losing money on each plane. Executives said the plane, which made its first airline flight in 2011, will start generating cash this year.

About one-third of Boeing's revenue comes from defense-related products, and that part of the company is shrinking as defense budgets come under pressure. Defense, space and security revenue fell 7 percent.

Boeing shares closed up $7.16, or 5.4 percent, to $139.64 after peaking at $141.88 earlier in the day. They have gained 7.4 percent in 2015 and 1.9 percent in the last 12 months.


David Koenig can be reached at http://twitter.com/airlinewriter

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