News Column

Boeing leaders make their case to analysts here Wednesday

May 19, 2014

By Dominic Gates, The Seattle Times



May 19--Boeing's executive leadership, Wall Street analysts covering the company, and shareholders gather in Seattle this week for the jetmaker's annual investor conference at the Fairmont Olympic hotel in Seattle.

They'll attend a reception Tuesday evening, with the investor meeting beginning at 7:30 a.m. Wednesday. The event will be streamed live.

Chief executive Jim McNerney will head the presentations, along with chief operating officer Dennis Muilenburg, Commercial Airplanes chief Ray Conner, defense-side chief Chris Chadwick and chief financial officer Greg Smith.

Although Boeing's stock is down 3.7 percent this year, it has still risen by one third since the investor conference a year ago.

For comparison, the S&P index is up nearly 3 percent this year, but is up only 13 percent from a year ago.

Analysts are likely to focus their questions on future cash flow expectations, cost reduction efforts and strategic risks to the business.

Management will need to provide reassurance on its ongoing effort to reduce costs on the 787 Dreamliner. The 787 program has racked up more than $23 billion in cumulative losses from the more than 200 airplanes delivered so far.

Boeing projects that the losses will peak at $25 billion next year before the cost of producing each plane finally is lowered below the sales price. At that point, the cumulative loss begins to fall and the company expects it to gradually be whittled away over two decades of profits.

Some analysts believe it will take Boeing longer to reach the peak loss. A note to investors sent Monday by David Strauss of UBS projects that Boeing's 787 losses could continue to accumulate through 2017 and top out at nearly $35 billion.

Another concern that will be discussed is the risk to Boeing's massive backlog of jet orders as the breakneck growth of Asian airlines shows signs of faltering.

Dominic Gates: (206) 464-2963 or dgates@seattletimes.com

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(c)2014 The Seattle Times

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Source: Seattle Times (WA)


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