Losing Altitude: Boeing's first-quarter earnings

Boeing, the world's second-largest commercial aircraft manufacturer, reported its first quarter earnings today. It's been a tough few months for the company, as the recession has cut passenger air travel and air cargo. From fewer passengers to fewer flights to fewer planes is a fairly short trip, and the sinking demand pushed Boeing to cut 10,000 jobs in January. It also decided to cut production on its model 777 planes by 28 percent, while delaying a planned production increase on its 747-8 and 767 planes. These moves, which were designed to help the company level off and ride out the recession, also came with a drop of 38 cents per share.

All tolled, Boeing's profit dropped 47 percent to 86 cents per share. Revenue increased by 3 percent over last year to $16.5 billion, but fell short of the $16.62 billion/91 cents per share that analysts were predicting. Over the course of this quarter, the company's stock dropped to $29.05 per share, a six-year low.

While Boeing anticipates a leveling off in defense spending and many analysts anticipate a drop in the demand for the top-selling 737, the company's future is not entirely dark. The manufacturer is progressing in the development of its 787 model, a lighter-weight, more fuel-efficient passenger plane. It intends to test the aircraft in the second quarter, and already has firm orders for 886 of the new planes.

At this point, Boeing is pursuing a conservative strategy to weather the next few months. With defense priorities changing, global consumer spending on hold and considerable efforts to amp up the profile of train travel, the airplane manufacturer has, wisely, worked to slow down production in an orderly, intelligent way. While the immediate future looks problematic, the 787 and Boeing's strong position make it a good bet long-term.

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