Boeing Reports Fourth Quarter Earnings
January 27th, 2010
Boeing today announced its fourth quarter, year end earnings.
As advised, the company maintained its delivery target of between 480-485 airplanes, having delivered 481 units during 2009.
The stand-out items for the period ended 2009 are as follows:
- Revenue grew to $68.3 billion while earnings reflected solid core operating performance affected by previously announced events
- Operating cash flow of $5.6 billion reflects strong management of working capital
- Cash and marketable securities of $11.2 billion provides strong liquidity for 2010
- Backlog of $316 billion - over four times current annual revenue
Image courtesy of Boeing
While EPS was lower, full year revenues were up 12% on the back of stronger deliveries in the first full year after the IAM machinist strike during the fall of 2008.
Boeing reaffirmed first flight of the 747-8F this year, with deliveries scheduled to commence by the fourth quarter, alongside the 787-8. Its guidance for commercial deliveries this year falls around 5% between 460-465 against 481 for 2009. Boeing also expects that spending on R&D will fall in FY11, with around $1.9bn marked for the second 787 final assembly line in South Carolina.
R&D for this year is expected to be between $3.9bn and $4.1bn
From the conference call, key details are as follows:
Jim McNerney
• Year of significant achievement
• Global recession resulted in lower orders and lower delivery prices
• DoD budget pressures
• Record revenue for the year
• Strong earnings
• Defense, Space & Security showed double-digit growth margins
• Cash performance “outstanding”
• Important milestones achieved in 2009
• First 777F delivery
• P8-A first flight
• Backlog of $316bn
• BCA backlog of $250bn (7x annual revenue)
• DSS backlog of $65bn
• Pleased with C-17 sales
• Less risk in supply chain after Vought/Global Aeronautica purchases
• 787 first flight – historic moment in aviation
• Continue to expand flight test envelope, more rigorous flight test regime
• All six flight test 787s flying by end of Q2 2010
• Aim for 10x 787s per month by end of 2013
• 747-8F first flight in very near future
• 747-8I EIS in Q4 2011
• Continue to see long term order value in 747-8 family
• Significant growth potential despite challenging environment
• Recession has impacted traffic growth
• 271 deferrals, 121 cancellations, 57 deferrals in Q4 2009
• Deferral rate decreased
• Oversold for FY 2011
• 9,300 job cuts completed in 2009
• Target is to get 787 into hands of customers
• Things to look at: 787 deliveries, progress at Charleston
• Order outlook: Book-to-build below 1 for 2010
• 737 re-engining decision will come quicker than decision on 777 update/replacement
• Block improvements on 787 are on track
• 787 weight within customer mission requirements
• Do not anticipate major modifications to 787
• Initial airworthiness certificate came quickly
• Customer base pushing Boeing to consider 737 re-engining as well as replace 737 family
• Less to do with obsolescence of 737NG than on airplane productivity
• Unidentified 737 orders due for delivery beyond 2011
• Financial strength in market place
• Growth in Chinese financing
• Close to 30 787s in inventory by year end / first delivery
• New opportunities to sell (747) at new prices as it proves itself (in flight tests)
• Confident of (747-8) marketability
• 747-8F productivity significant over other freighters
• Pickup in 747-8I activity
• No problem with profitability of 747-8 family if achieves half of “740” perceived market
James Bell
• Record $6.83bn revenue
• Operating cash flow $5.6bn
• BCA recorded 11.% margin in Q4 2009
• 787 costs rise by $1.3bn
• 787 not in loss position – accounts for side of body fix, schedule changes and R&D adjustments
• Zero margins on delivery, increase as further deliveries commence
• DSS - $8.5bn revenue with 9.7% margin in Q4 2009
• BCC provided $766m financing in 2009
• $1.5bn put into pension plan
• Strong liquidity
• Lower 777 volumes
• EPS target $3.70-$.400
• Few 787 and 747-8F deliveries in FY10
• Higher revenue seen in FY11 on higher widebody output
• $500m decrease in R&D in FY11
• Potential 737/777 investment
• Production sold out in 2011 and oversold
• Costs on 787 deliveries will be higher than R&D expensed 787s (x3)
Entry Filed under: Boeing, Boeing 737-700, Boeing 737-800, Boeing 737-900ER, Boeing 737NG, Boeing 747, Boeing 747-400, Boeing 747-8 Intercontinental, Boeing 747-8F, Boeing 747-8I, Boeing 767, Boeing 777, Boeing 777-200LR, Boeing 777-300ER, Boeing 777F, Boeing 787, Boeing 787 Dreamliner, Boeing 787-3, Boeing 787-8, Boeing 787-9, Boeing Commercial Airplanes, Boeing Current Market Outlook, James Bell, Jim McNerney
34 Comments Add your own
1. Ryan | January 27th, 2010 at 14:35
Some good numbers, but they have to ensure delivery of the 787 by the end of the year if they hope to make money from it.
2. Chris Wallace | January 27th, 2010 at 15:21
They need to ensure delivery of many hundreds of them if they want to make money from them.
Even with all the write-offs and write-downs, Boeing is still posting decent financials every quarter, which must be heartening to the investors.
3. Boeing Investor | January 27th, 2010 at 16:41
The financial results and margins show a well run company with solid operations.
Of course, the big unknown is the ability to gain certification for the 787 and the 747 and to bring delivery rampup smoothly and without complications.
One should be encouraged by the good management of the past quarter and hope this translates into effective control of the challenges during the next few quarters.
4. Leelaw | January 27th, 2010 at 17:59
I thought for a minute there that call would actually get a bit more interesting and Mr. McNerney was gonna try to spin that a glut of redundant 744s available for conversion to freighters would be positive driver of 748F sales…damn clarifications!
5. Jerry1t | January 27th, 2010 at 18:20
Inquiry: McNearny indicated that there would not be any major modification to the 787 based on the 60 hours of flight testing of ZA001.
Is it possible after flying for less than 2% of the entire testing period to confirm that the plane matches the important computer modeling system in place and has not indicated any serious nonconformity.
I am sure there are other aspects that have to be validated, but does this initial tranch of flight give good reason to be optimistic and indicate that the basic strucure and systems of the plane are working as expected and require minor, not major, adjustments?
6. Vero Venia | January 27th, 2010 at 18:33
Jim McNerney said that if the 747-8 program achieves 370 sales/deliveries, then there is not problem with its profitability.
That gives you the upper bound. The 747-8 profitability threshold is below 370 units, whatever the actual limit is.
There are about 108 orders until now. I think there will be about 10 sales this year 2010. I can be wrong.
7. CE7 | January 27th, 2010 at 19:18
So much for the supposedly little investment that the Boeing cheerleaders have tried to put forth on the rehashed and tired 747. Boeing would be better off to put it out of its misery because it will never sell 400 copies required for profit with cargo market in the toilet and abundance of cheap conversions while the A380 steals it’s lunch in the passenger market.
8. Mike M | January 27th, 2010 at 20:07
CE7 is spouting his crap again. If you listened to the call, McNerney said the 747 will become profitable if it secured half of the 740-jet market Boeing forecasted.
The A380 break-even alone is beyond 420, so how you think the 747 should be put out of its misery is quite amusing.
You should read Shoot The Dog, wake up and smell the coffee, fool.
http://www.fleetbuzzeditorial.com/2010/01/06/shoot-the-dog3/
9. Fan of 747 | January 27th, 2010 at 20:17
Responding to CE7
What lunch are you referring to that the A380 will steal? At best the A380 can only digest a very thin bolony sandwich and Airbus has to consider whether to maintain the strain and misery it is causing on the rest of its programs.
The 747 has over 100 orders before proving its qualities which will be sufficiently impressive to warrant increasing orders as the economy solidifies. It has a few years of assured production so there is time to postpone concerns
10. Vero Venia | January 27th, 2010 at 22:22
7. CE7 | January 27th, 2010 at 19:18
Jim McNerney has only stated that at 370 sales the 747-8 would not have any profitability problem. He didn’t say that 370 was the “break even point”. It looks like there is a number between 108 and 307 beyond which the 747-8 would be profitable. It means that the actual threshold could well be 200 or 250 or maybe 369. Who knows?
11. Tweets that mention &hellip | January 28th, 2010 at 02:39
[...] This post was mentioned on Twitter by FleetBuzz Editorial, FleetBuzz Editorial, FleetBuzz Editorial, FleetBuzz Editorial, Paulo Sérgio Martins and others. Paulo Sérgio Martins said: RT @FleetBuzz Boeing Q4 Earnings Updated: http://bit.ly/9BcM3C [...]
12. Paulo M | January 28th, 2010 at 07:17
Well, it is a pretty good report. Boeing certainly has managed itself adequately - they’ve had an outstanding year judging by the numbers.. Jim McNerney, James Bell and the rest of the team have done well against a whole lot of outspoken bloggers - not that matters.
Sounds very encouraging the positive language - especially with regards the 747-8. I know that will come across as the company trying to talk-up this bird, but as they say, let’s see what happens in flight test. With regards sales, giving that the market is pretty small, aircraft performance will have to be key.
13. ikkeman | January 28th, 2010 at 09:16
5. Jerry1t | January 27th, 2010 at 18:20
he could have made that claim after the static test plane passed the required limit load test before first flight. No more basic structural changes are required.
That does not rule out local reinforcements or system changes.
flight test is just a validation period - it’s not the time to find the major trouble.
7. CE7 | January 27th, 2010 at 19:18
Never is a long time… and it’s less than 370, not more than 400 - or do you have other (more dependable) substantiation for your claim?
8. Mike M | January 27th, 2010 at 20:07
and what percentage of that VLA market do you recon the 747 will gain, competing vs the 777/350 at the bottom and the 380 at the top.
I’d say less that 50%.
9. Fan of 747 | January 27th, 2010 at 20:17
A380 had almost 200 orders before first flight.
10. Vero Venia | January 27th, 2010 at 22:22
Jim knows
14. Paulo M | January 28th, 2010 at 09:49
The A380 had almost 200 orders before first flight.
The A380 has 200 orders almost 5 years later.
Boeing has added almost 110 orders for the 747-8 in those same 5 years. To be fair, total 747 orders since 2005 have been 150.
150.
150 in 5 years.
200 in 10 years.
=====================================================
But that’s besides the point, the point is the 747-8F is going to leave the ground very soon. Wooohooo!!!
15. Mike M | January 28th, 2010 at 10:06
>>>what percentage of that VLA market do you recon the 747 will gain
Its not about what %age it gains, its about profitability and now we know that could be achieved in 370 sales.
>>>A380 had almost 200 orders before first flight.
787 had almost 900, and your point is what exactly?
Paulo - your post is priceless:
“150 in 5 years.
200 in 10 years.”
Love it!
>>>Leelaw
Yes, it was quite amusing to hear McNerney say what he did about the 747BCF/-8F!
Muddled script perhaps
16. Vero Venia | January 28th, 2010 at 10:55
13. ikkeman | January 28th, 2010 at 09:16 says “and what percentage of that VLA market do you recon the 747 will gain, competing vs the 777/350 at the bottom and the 380 at the top.
I’d say less that 50%.”
First, don’t forget that your remark concerning the A350 and 777 is also valid for the A380. How many airlines would take the very efficient A350XWB and the next-gen 777 instead of taking big or very big aircraft like the 747-8 or the A380?
Second, don’t you ever forget that the “half of 740 units” concerns both the 747-8F and the 747-8 Intercontinental.
Under those considerations, I think 50% (of 740) is achievable.
17. ikkeman | January 28th, 2010 at 13:34
14. Paulo M | January 28th, 2010 at 09:49
Since April 2000 Boeing Sold a grand total of 223 747’s
I didn’t find if any were cancelled.
http://active.boeing.com/commercial/orders/index.cfm?content=userdefinedselection.cfm&pageid=m15527
Since April 2000 Airbus Sold a grand total of 241 380’s
A total of 202 of those remain on the orderbook, mostly due to the end of the 38F (-27)
http://en.wikipedia.org/wiki/List_of_Airbus_A380_orders_and_deliveries
That’s 223 vs 202, or about 10% apart - their price is definately more than 10% apart.
Considering the 747 orders are mostly for freight versions, and both Boeing and Airbus predicht the freight market is significantly smaller than the pax market in VLA’s, I stick to the point I was making in response to Fan of 747’s post - The A380 had a pretty good run before it’s first flight just like the 748…
And Yes, Here’s hopeing she flies soon
15. Mike M | January 28th, 2010 at 10:06
Your post is priceless, and priced exactly what it’s worth - as always.
as to my point, see above.
16. Vero Venia | January 28th, 2010 at 10:55
I thought the 740 was the number of pax, and another few hundred for the freight.
Yes, 50% of the combined pax/freight market is completely achievable.
The 350/777 “trouble” for the 747 is valid for teh 380 as it reduces the size of the VLA market, however - the relative size difference between 777/350 to 748 is a lot smaller than the 777/350 to 380. Therefore, when you’re considering a 380 - you’re less likely to add a 350/777 to that consideration.
Therefore the 350/777 will be less of a direct competition to the 380 than the 748.
18. Leelaw | January 28th, 2010 at 14:59
“Since April 2000 Airbus Sold a grand total of 241 380’s”
I tally 222 gross firm orders (including 7 -F’s converted to Pax), less 20 -F cancellations, plus 8 outstanding “order commitments”…not sure how you got to 241?
19. Dougloid | January 28th, 2010 at 15:00
Paulo sez
“The A380 had almost 200 orders before first flight.
The A380 has 200 orders almost 5 years later.
Boeing has added almost 110 orders for the 747-8 in those same 5 years. To be fair, total 747 orders since 2005 have been 150.
150.
150 in 5 years.
200 in 10 years.”
Is that what CE7 calls eating your lunch? Bwahahahahaaaaa.
Might be one a Joe Arpaio’s famous green bologna sandwiches?
20. Jerry1t | January 28th, 2010 at 15:03
Ikkeman’s comment in #13 indicates that “flight test is just the validation period. It is not the time to find major trouble”
What are the challenges and obstacles facing certification for the 787 in the 9 month period that Boeing says it needs to complete this process.
If the prospects of major trouble are eliminated, where are the risks and surprises? What situations are possible to throw this schedule of the mark?
21. Paulo M | January 28th, 2010 at 15:12
17. ikkeman | January 28th, 2010 at 13:34
I know how 747’s have been sold since 2000 - I looked at it before I posted post 90. in: http://www.fleetbuzzeditorial.com/2010/01/18/spin-on-this/#commentform
Also prior to the launch of the 747-8, between 2000 and 2005, Boeing booked 73. I know Airbus booked around 80-something in 2001 - the initial excitement rush - and the trend generally has been for lower order totals in each year since.
Ah, wait a minute - I mentioned it here:
139. Paulo M | January 24th, 2010 at 19:47 also at:
http://www.fleetbuzzeditorial.com/2010/01/18/spin-on-this/#commentform
22. Vero Venia | January 28th, 2010 at 16:15
17. ikkeman | January 28th, 2010 at 13:34
Boeing gave a very conservative number for the 747-8 program. Time will tell if their number is too conservative or simply realistic. If my memory serves me well, since the launch the projected/expected production for the 747-8 has never exceeded 500, most of them are freighters.
Again, time will tell if the market will change its behavior. Today, the VLA market seems to stand still.
23. robert | January 28th, 2010 at 16:57
The 747-8 could make money, But even if it breaks even it takes away from airbus making profitablity for the a380 even harder to acheive. Lossing one round but ultimatly wining the title!!
24. ikkeman | January 28th, 2010 at 17:09
20. Jerry1t | January 28th, 2010 at 15:03
The risk is in convincing the FAA that some of the “softer” requirements are met by carbon composite. As in fumes produced in case of fire, survivablility in a crash, accidental damage detection and repair…
I have no doubt Boeing has a plan on how to satisfy the FAA the 787 meets or exceeds all certification requirements, and I have no doubt the 787 is no less safe than any other a/c out there - But I don’t work for the FAA.
23. robert | January 28th, 2010 at 16:57
are you still hoping for an eventual positive ROI for the 380?
I agree that even if not a single 748 is ever delivered it is still a succesfull program. It put the nail in the 38F coffin quite firmly and prevent Airbus being able to use the “we’re the only ones with a full product line” marketing.
25. Erik Bloodaxe | January 28th, 2010 at 22:27
20. Jerry1t | January 28th, 2010 at 15:03
The risk is in convincing the FAA that some of the “softer” requirements are met by carbon composite. As in fumes produced in case of fire, survivablility in a crash, accidental damage detection and repair…
Ah the ol’ fire smoke and tox foil… this has been debunked time and time again. There is but one very vocal yokle crank out there making noise and conspiracy theories. Is that YOU Jer?
26. Dougloid | January 28th, 2010 at 22:37
Ikkeman sez “The risk is in convincing the FAA that some of the “softer” requirements are met by carbon composite. As in fumes produced in case of fire, survivablility in a crash, accidental damage detection and repair…”
Well, a lot of that work is already in the can over on the military side where the B2 and F117 programs reside.
27. ikkeman | January 29th, 2010 at 08:50
25. Erik Bloodaxe | January 28th, 2010 at 22:27
nope, not Jer
26. Dougloid | January 28th, 2010 at 22:37
military certification is quite a bit different than commercial.
As I said, I have no doubt the 787 is safe and that Boeing has a plan on how to proof it. Only thing I’m saying is that the biggest risk to the program at this point is Boeing and the FAA disagreeing on how to show compliance to the FAR’s.
I don’t think it’s likely, but it is a large risk.
the largest left.
28. Chris Wallace | January 29th, 2010 at 15:33
Boeing has been performing tests and “pre-certification” on a number of 787 components in conjunction with the FAA, so it’s not like Boeing and the FAA entered the flight test program with absolutely no idea how the 787’s CFRP structure would perform during said program.
29. Stealth | January 29th, 2010 at 22:17
So Boeing still can’t/won’t tell us how many 787s will be delivered in 2010 and 2011. Is it really that difficult?
30. Mike M | January 30th, 2010 at 02:27
Ikkeman
Your scare stories are BS:
http://boeingblogs.com/randy/archives/2007/09/testing_testing.html
The 787 is safe whether you like it or not.
You starting to sound like that retard Vince Weldon and the TV loser Dan Rather after their anti-787 broadcast.
31. Private | January 30th, 2010 at 10:53
29. Stealth | January 29th, 2010 at 22:17
So Boeing still can’t/won’t tell us how many 787s will be delivered in 2010 and 2011. Is it really that difficult?
MOst probably because they dont know for certain that the 787 will be certified…seems plausible.
32. ikkeman | January 30th, 2010 at 12:42
30. Mike M | January 30th, 2010 at 02:27
is reading really that difficult - or did I cut to close to the truth for you - read again:
from 27. ikkeman | January 29th, 2010 at 08:50
” As I said, I have no doubt the 787 is safe and that Boeing has a plan on how to proof it”
33. Vero Venia | January 30th, 2010 at 16:34
29. Stealth | January 29th, 2010 at 22:17 Is it really that difficult?
Yes.
34. Dougloid | January 31st, 2010 at 07:14
Private sez “So Boeing still can’t/won’t tell us how many 787s will be delivered in 2010 and 2011. Is it really that difficult?
MOst probably because they dont know for certain that the 787 will be certified…seems plausible.”
That malarkey is why you haven’t earned your PFC stripe. It will be certified-do you think some piss ant government agency is going to hold up the Boeing parade? When have they ever not certified an aircraft?
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