Boeing's Earnings Rise, Along With Dreamliner Costs -- 2nd Update

By Angela Chen 

Boeing Co. said its first-quarter profit rose 38% on growth in its commercial-airlines segment, but its revenue growth didn't keep pace and costs tied to its flagship 787 program continued to mount.

Shares, which have risen 18% this year through Tuesday's close, edged down nearly 2% premarket.

Boeing's results have been buoyed by strong commercial-jet demand in recent quarters, despite geopolitical developments that have slowed air-traffic growth in some regions. In the first quarter, commercial airline revenue grew 21% to $15.38 billion, while deliveries rose 14% to 184.

However, the company blamed an increase in 787 deliveries for its operating margin in the segment narrowing to 10.5% from 11.8%. Losses for the 787 program rose $793 million in the quarter to $26.94 billion.

Boeing and rival Airbus Group NV have built record order books on the promise of improved fuel efficiency. Tumbling oil prices, though, could make airlines defer investment in more fuel-efficient planes.

The world's largest aerospace company by revenue is now working through a $495 billion order backlog for commercial jets. That comes as some industry executives and investors have voiced concern about a potential bubble in jetliner demand.

Overall, Boeing reported a profit of $1.34 billion, or $1.87 a share, compared with $965 million, or $1.28 a share, a year earlier. Core operating earnings, which exclude items including pension components related to market fluctuations, improved $1.97 from $1.76.

Revenue grew 8.2% to $22.15 billion.

Analysts polled by Thomson Reuters had expected $1.81 in per-share earnings and $22.49 billion in revenue.

Boeing's defense, space and security segment again posted weaker results. Revenue dropped 12% in the first quarter, with the biggest decline coming from the military aircraft divisions, while earnings from operations edged down 4.5%. The company is restructuring the defense unit to counter military budget pressures and compete for a number of coming Pentagon awards.

Boeing backed its financial and deliveries guidance for 2015 and said it bought back 17 million shares in the quarter for $2.5 billion.

Write to Angela Chen at [e-mail]

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