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Boeing’s share price (NYSE:BA) is up 2% today to 130.10, the highest that it has been since 03 March. Since falling below the 130.00 mark on 29 January, it has broken the barrier only three times before today. Boeing stock closed yesterday at 127.55, opening this morning at 130.75, following a spate of major announcements over the past several days.
Revenues u↑p, Earnings do↓wn.
First quarter revenue was up 8.3% to $20.47 billion. Core earnings were up 12% to 2.1 billion, but net earnings dropped by 13% to $965 million.
The revenue boost was generated by the delivery of 161 commercial aircraft, including the 737 and the 787 Dreamliner. Deliveries of the latter had been delayed for months whilst problems with batteries on board were being investigated.
Voluntary Layoffs
Boeing is offering a voluntary layoff option to some 11,000 mid-level, non-union management employees at three plants in and near St. Louis. Although it is not know how many employees Boeing needs to layoff to adequately lower operating costs, my personal experience with voluntary layoffs is that the pool is much larger than the actual amount needed. If it were not, there would be no point for the exercise and involuntary layoffs would become the order of the day. In the US, at least, employees usually view voluntary layoffs as a good or, at least, opportune thing.
The layoffs will help free up cash flow, a problem with which the company has been dealing with, rather successfully, this past year.
A Bird in the Hand
Boeing’s business is not just having a bird in the hand, but also to keep sending them out into the bushes.
Boeing has 50 birds in hand at the moment in the form of 737’s to be delivered to Shandong Airlines in China. Reports out of St. Louis also indicate that Boeing has “teamed up” with Lockheed-Martin to build a new bomber for the US Airforce in Boeing’s local facilities.
Demand continues to remain strong for Boeing’s fuel-efficient 737. The market for planes of the 737 type (and Airbus 320) is estimated to be $20 TRILLION dollars between now and 2034.
Finally, Boeing has raised its 2014 profit forecast by $0.15 per share. This is due, in part, to an expected tax credit that will become available later this year.
CEO Jim McNerney said that “[our] financial and operational strength enabled the return of more than $3 billion to shareholders in the quarter through share repurchase and an increased dividend, even as we continued to invest in our future. Our outlook for the full year remains positive on the strength of demand for our fuel-efficient new commercial airplanes, our solid position in global defense, space and security markets, and our enterprise focus on meeting customer commitments, improving productivity and profitably delivering the growth in our sizable backlog.”
