On the morning Boeing reported better-than-expected quarterly earnings, the aerospace giant’s chief executive spoke first about the latest major mishap on one of its prized 787 Dreamliners.
And, it happened, Jim McNerney’s last words on Wednesday’s teleconference also concerned the July 12 fire aboard an Ethiopian Airlines 787 parked at London’s Heathrow Airport.
The CEO began by saying Boeing is working with its airline customers to inspect and temporarily remove the jets’ emergency locator transmitters, the part British and American investigators believe played a role in the recent blaze. In response to a question, he concluded by saying it was too early to discuss how the damaged composite fuselage of the Ethiopian plane, which was made in North Charleston, might be repaired.
“In sum, we believe good progress has been made in addressing this issue, and we remain highly confident in the future of the 787 program and the integrity, safety and performance of the airplane,” McNerney said.
It’s been like that for years now: No matter how well Boeing does overall, the 787’s serial problems continue to dim the spotlight, even, as in the recent spring quarter, Dreamliner deliveries boosted the company’s revenues.
Boeing reported second-quarter net earnings of more than $1 billion on $21.8 billion in revenues. Its core operating earnings, a measure which excludes certain pension expenses, were more than $2 billion.
The earnings, by either measure, were up over the same three-month period last year, exceeding analysts’ expectations and leading Boeing to raise its full-year earnings expectations.
Boeing credited the 9 percent revenue increase to an uptick in deliveries, especially 787s and 737s. Meanwhile, new orders, including for the just-launched 787-10 grew the company’s work backlog to a record $410 billion at the end of the spring period.
Boeing delivered 16 787s in the second quarter, and 17 for the year. The company had delivered 50 before a pair of smoky battery malfunctions in January grounded the jet for more than three months.
McNerney said Boeing has compensated airlines for the grounding.
“There were some instances where we had obligations to customers and those have all been satisfied,” he said. “We think they are all behind us now.”
Boeing finance chief Greg Smith said the company still plans to deliver more than 60 787s this year, a fifth of which would come from the North Charleston plant.
“Certainly if we can do more, we will,” he said.
McNerney said Boeing still plans to launch the 777X later this year but said the decision on where that jet’s composite wings will be sourced won’t be made until next year. There had been some speculation that Boeing South Carolina, which specializes in composite work, could win some work for that jet.
In the meantime, McNerney said Boeing is thinking about increasing production of the single-aisle 737 and the twin-aisle 787.
Boeing, which is making 38 737s per month now in Renton, Wash., will be making 42 per month by the middle of next year, McNerney said, and “we are positioned to match production with additional demand as our customers require it.” He said the plan is to reach parity with arch rival Airbus’ single-aisle jets.
He said the introduction of the stretch 787-9 and 787-10 could mean Boeing eventually produces more than 10 Dreamliners per month. Analysts have predicted such an increase for some time given Boeing has more than 800 unfilled orders for the 787. The company plans to reach the 10/month rate by the end of the year.
“So we’ll make the call on moving beyond 10 once we‘ve settled in at 10 and have a very firm foundation,” McNerney said. “And I think, if I were a betting man, I’d think that the marketplace demand could move us in that direction over time.”
Reach Brendan Kearney at 937-5906 and follow him on Twitter at @kearney_brendan.