Boeing Profits Fall 46 Percent
Jul. 23, 1998
SEATTLE (AP) _ Ongoing production problems and the pressure to keep aircraft prices low have again hurt Boeing Co. profits, the company reported today.
Boeing said that for the three months ended June 30, it had net earnings of $258 million or 26 cents a diluted share, down 46 percent from $476 million or 48 cents a share a year earlier. Sales totaled $13.4 billion, up 9 percent from $12.3 billion in second-quarter 1997.
Industry analysts surveyed by First Call had estimated quarterly earnings at 33 cents a share.
Second-quarter 1998 earnings were down because of lower profit margins on commercial aircraft and additional late delivery costs due to problems with the new generation of 737 jetliners, Boeing Chairman Phil Condit said. Boeing also took a charge of $78 million related to the planned termination of the MD-11 aircraft line.
Most of the sales increase was due to the 777 and next-generation 737 aircraft, but new commercial jet programs have lower profit margins because of higher production costs in the initial years, Boeing said.
The 737 program has been especially troubled, with production inefficiencies and parts shortages, extensive changes required after flight testing and lower revenue due to the mix of models being delivered, Condit said.
He said Boeing has made significant headway toward correcting the problems, but no gross profit will be recorded on the new 737 program until the production rate from 14 aircraft to 21 aircraft per month is achieved later this year.