The recent air show in Farnborough, England, put a lot of new planes on the order books for both Boeing Co. (NYSE: BA) and the European Aeronautic Defence and Space Co. (PINK: EADSY), makers of the Airbus family of planes. The two companies have booked more than $25 billion in new orders at international air shows so far this year, and both have submitted bids for a US Air Force tanker aircraft contract worth $35 billion.
Now, they just have to deliver. Boeing reported earnings this morning and noted that its 787 Dreamliner’s scheduled release at the end of this year “may move a few weeks” into 2011. The company’s 747-8, also scheduled for delivery in the fourth quarter of 2010, could also be pushed out into next year. Airbus has its own delivery pressures with its A400M military transport, now four years late, and the slow start to its A350 and A380 programs.
A full order book didn’t help Boeing much in the second quarter. The company’s earnings fell
–21% compared with the second quarter of 2009, from an EPS of $1.41 in 2009 to $1.06 this year. That still bested consensus EPS estimates of $1.01. Revenue fell –9%, from $17.15 billion to $15.57 billion. Analysts were expecting $16.13 billion.
Boeing reaffirmed its 2010 guidance on revenue of $64-$66 billion, EPS of $3.50-$3.80 and operating cash flow of zero. The company expects 2011 revenue to be higher, but it didn’t give a total. Boeing expects to delivery 460-465 commercial aircraft next year generating revenue of $31-$32 billion. The company’s other divisions are expected to contribute $32-$33 billion in revenue. The total doesn’t look higher than 2010 revenue, it looks lower by $1 billion on either end.
The Air Force tanker contract is scheduled to be awarded for the third time in November. The two previous results, one favoring Boeing and the other favoring EADS, were nullified. This contract may be the last huge military contract for some time, as governments figure out ways to rein in military spending. And a new airplane is among the most expensive pieces of military hardware, so cutbacks are practically guaranteed.
Boeing shares are down about -1.5% this morning, and EADS OTC shares are also down about –1%.
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