Things are looking up, up, up for Boeing’s (BA) defense business, thanks to a sharp rise in commercial jet sales.
And apparently, everyone wants a piece of the action: Demand for new fuel-efficient planes soared astronomically in the latest quarter. Boeing must have said a few Hail Marys, because this is exactly what it needed to offset the decline in its defense business.
Not only did Boeing’s recent results give the company an about-face, but the huge increase in its deliveries lifted BA’s profitability, too. Revenue for passenger jets jumped a whopping 19%. The aerospace giant was certainly busy this past quarter, shipping out 787 Dreamliners and single-aisle 737s left and right.
Thanks to this turnaround, Boeing was able to cut production costs on the 787s. But, this change isn’t temporary, because Boeing hiked its earnings forecast for the entire year – a good sign for investors. Boeing can expect clear, sunny skies ahead… for the most part.
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What’s gloomy is, the costs related to moving workers from pension plans to 401(k) retirement plans is weighing the company down, as well as its bottom line.
Robert Stallard, RBC’s analyst, says, “We think investors will be breathing a sigh of relief – we’ve been hearing some pretty doomsday forecasts for free cash flow this quarter, and the actual result has turned out to be far better than some feared. We’re also pleased to see Boeing stepping up to buy back stock aggressively in the recent period of share price softness.”
Boeing has been on a rollercoaster this first quarter. First, it was coerced into hiring hundreds of contract workers since one of its plants had greatly struggled to rev up productivity. Then, its stock suffered this year, thanks to investor concerns about slowing deliveries of the Dreamliner.
But with these most recent results, happy days are here for Boeing, and it can finally take a breather.