Boeing faced with strong headwinds
Posted by in News | 0 Comments
By Tim Devaney, The Washington Times
Jan. 25--Repeating stellar year will be tall task
Aerospace giant Boeing announced Wednesday it had posted its best year ever in 2011, but it faces a tough time repeating the performance in 2012.
The Chicago-based plane-maker announced a 20 percent increase in earnings and record revenue gains in 2011. Earnings per share improved to $5.34, up from $4.45 the previous year. Revenue from deliveries hit a record high of $68.7 billion, up from $64.3 billion in 2010 and $68.3 billion in 2009. The company also increased its backlog of future sales.
But Boeing now faces likely cuts in U.S. defense spending, rising pension costs and a higher tax rate. The outlook has the company projecting lower earnings this year from $4.05 to $4.25 per share.
Boeing CEO and President W. James McNerney Jr. expressed confidence the company can weather the storm. After investors showed initial signs of concern, the stock ticked back up 46 cents, or less than 1 percent, to close at $75.82.
"We enter 2012 with renewed momentum and proven business and product strategies," Mr. McNerney said Wednesday. "With a record backlog and intense focus on productivity, we are well positioned to deliver growth and increased competitiveness, even as we face constrained U.S. defense spending and pension headwinds."
This comes as Boeing's European rival, Airbus, again outpaced the company in global sales in 2011. Airbus last week announced it booked 1,419 new orders and made 534 deliveries, compared with Boeing's 805 new orders and 477 deliveries.
Boeing expects to continue production increases in 2012 that will boost revenue to the range of $78 billion to $80 billion, which would far surpass last year's record high.
The first 787 Dreamliner hit the market in 2011, but delays have slowed production. This year, Boeing hopes to ramp up production for that model, as well as other twin-aisle planes such as the 777 and 747-8.
"Clearly, wide bodies tend to bring you better revenue," Boeing spokesman Chaz Bickers said.
Richard Aboulafia, vice president of analysis at the Virginia-based Teal Group, expressed doubts that Boeing will be able to correct all of its problems with the 787 Dreamliner and continue its momentum in the new year.