Revenue from increasing deliveries of commercial aircraft boost Boeing's 4Q profit 19 per cent

DALLAS – Demand for commercial airliners boosted Boeing Co.’s fourth-quarter profit by 19 per cent, topping Wall Street expectations by a wide margin and offsetting weakness in the defence business.

Its shares jumped 7 per cent in afternoon trading Wednesday.

Investors seemed to look past Boeing’s muted outlook for 2015. The company said that adjusted earnings this year will be between $8.20 and $8.40 per share. That is below analysts’ forecast of $8.66 per share, according to a FactSet survey. But the company expects 2015 revenue of $94.5 billion to $96.5 billion, which would easily beat analysts’ consensus expectation of $93.25 billion.

Chicago-based Boeing and European rival Airbus have gained as airlines around the world went on a shopping spree, helped by rising demand for travel and cheap financing.

Falling oil prices, which make jet fuel cheaper, could hurt demand for new planes by reducing the advantage airlines get from the new, more fuel-efficient models. In December, Air France-KLM said that lower oil prices could help it delay new planes by lowering the cost of flying with its current older ones.

Boeing CEO James McNerney discounted fears that falling fuel prices could hurt Boeing. He said plane orders are more closely tied to airline profits — and those are booming — than to oil prices. Boeing expects to deliver 750 to 755 commercial jets this year, up from a record 723 last year.

The company ended 2014 on a strong note. Stepping up production rates to meet demand, Boeing delivered 195 commercial jets in the fourth quarter, up from 172 a year earlier. While those planes were rolling off the assembly line, Boeing took in 432 net orders for new planes. That raised the company’s full-year net orders to 1,432. Boeing now has an 8-year backlog of nearly 5,800 commercial jets with a record value of $440 billion.

For the fourth quarter, Boeing said net income was $1.47 billion, or $2.02 per share, compared with $1.23 billion, or $1.61 per share, a year earlier. Excluding volatile pension-funding obligations, Boeing said that so-called core earnings rose to $2.31 per share. Analysts expected $2.11 per share, according to FactSet.

Revenue rose 3 per cent to $24.47 billion, also beating FactSet’s Street forecast of $23.93 billion.

In the commercial-plane segment, revenue grew by 15 per cent. About one-third of Boeing’s revenue comes from defence-related products, and that part of the company is shrinking as defence budgets come under pressure. Defence, space and security revenue fell 7 per cent.

Boeing shares were up $9.35, or 7.1 per cent, to $141.83 in afternoon trading. They began the day up 1.9 per cent so far in 2015 but down 3.6 per cent in the last 12 months.