LOS ANGELES Boeing Co.s earnings jumped 51.9 percent year on year in the second quarter as replacements for existing commercial transports account for a greater-than-normal share of new orders.
Boeings commercial transport deliveries rose 7.1 percent to 181 planes in the second quarter from 169 planes in the year-ago period. The operating profit for its Boeing Commercial Airplanes unit rose 6.7 percent to $1.55 billion in the quarter on a 5-percent increase in revenue to $14.3 billion.
Boeing booked 264 net orders for commercial aircraft during the quarter and had a June 30 backlog of over 5,200 planes valued at a record $377 billion. This compares with 235 net orders during the first quarter, which ended with a backlog of over 5,100 planes valued at $374 billion.
Commercial aircraft deliveries for the first half of 2014 rose 11.8 percent year on year to 342 planes. This presumably was aided by the previously troubled 787 Dreamliner program reaching a combined build rate of 10 planes per month at the companys Washington State and South Carolina assembly plants (amm.com, Jan. 29) and Boeings top-selling 737 airliner ramping up its monthly build rate to 42 in Renton, Wash., from an earlier 38 per month.
Boeing delivered 30 Dreamliners and 124 single-aisle 737s in the second quarter compared with 16 and 116, respectively, in the same period last year.
Replacement orders represent well more than half of Boeings airliner orders, which is above historical averages, chairman and chief executive officer W. James McNerney said during an earnings conference call. This includes replacements for aircraft that havent yet reached their "full life" of service.
McNerney attributed this trend to the traditional reasons of global economic growth forecasts and rising air traffic, but also to greater efficiencies in the latest generation of commercial aircraft in light of expectations that fuel prices will remain high.
"The industry hasnt seen this type of replacement economics since the (Boeing) 707," in the 1950s, he said, referring to Boeings first commercial jet transport that replaced then-dominant propeller-driven airliners.
However, Boeing also took a $425-million pre-tax charge in the second quarter ($272 million after taxes) on its KC-46A Air Force tanker programwhich is based on its 767 commercial airlinerdue to problems integrating wiring harnesses into the aircraft. McNerney maintained that the problems with the harnesses are "well defined and understood."
The Chicago-based aerospace company posted net income of $1.65 billion on sales of $22 billion in the second quarter vs. net income of $1.09 billion on sales of $21.8 billion in the same period last year.