News Column

Boeing Pledges Fix to 787; Defense Business Down

Jan 30, 2013

Tim Logan


Boeing Co. said Wednesday that it expects no impact to its bottom line from battery troubles that are plaguing the 787 Dreamliner and plans to speed up production of the plane, even as it devotes hundreds of engineers to solving the problems that have grounded its flagship jet.

The news, along with better-than-expected fourth-quarter earnings, cheered investors in the Chicago-based aerospace giant, which is one of the largest employers in metro St. Louis. Its stock was up nearly 1 percent in mid-day trading Wednesday even as overall markets were down.

In a conference call with analysts and reporters, Boeing chief executive Jim McNerney pledged full cooperation with federal investigators, who are studying why lithium-ion batteries caught fire on two 787s, prompting a worldwide grounding of the planes on Jan. 16.

"I'm confident we will identify the root cause of these incidents," he said. "When we know the answer, we'll know the answer and we'll act on it."

Meanwhile, McNerney said, the planemaker will continue, and even accelerate, production of the 787 and, he said he does not expect the episode will hurt Boeing's financial performance in 2013.

McNerney's comments came amid a discussion of the company's 2012 results. Boeing saw profits of $978 million in the fourth quarter, down 29 percent from the same period in 2011. But the decline was largely due to a one-time tax expense. The company beat Wall Street estimates of earnings per share and revenue grew 14 percent thanks to strong sales of commercial planes.

But the results illustrated the continued challenges facing Boeing's Defense, Space and Security division, which is headquartered in Hazelwood and employs roughly 15,000 people metro St. Louis. Profits for the defense operation fell 13 percent in the fourth quarter, and revenue was down 2 percent to $8.3 billion.

McInerney pointed to continued belt-tightening at the Pentagon and said Boeing is increasingly looking overseas for defense customers. In 2012, 24 percent of Boeing's defense revenue came from international customers, the company said, twice as much as five years ago. And McNerney said he expects that growth to continue.

"We continue to see strong demand for our offerings, particularly in the Middle East, Brazil and the Asia Pacific," he said.

Source: (c)2013 the St. Louis Post-Dispatch. Distributed by MCT Information Services.

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