Boeing forecasts FAA grounding 787 ‘Dreamliner’ won’t hurt 2013 earnings

Airplane manufacturer Boeing is predicting that a worldwide grounding of its 787 “Dreamliner” will not prevent it from turning a profit in 2013.

The forecast comes in a financial report that sees the Washington state-based company report $22.3 billion in earnings in the fourth quarter of 2012 and $81.7 billion for the year, which the company said was a record level.

ADVERTISEMENT
Boeing is predicting it will earn between $82 billion and $85 billion in 2013, despite the Federal Aviation Administration’s (FAA) investigation into the “airworthiness” of its 787 model after a series of battery defects.

Boeing said its 2013 financial outlook “assumes no significant financial impact from the FAA directive."

“The guidance reflects continued strong core performance, generating an expected 5 percent increase in core earnings per share,” the company said in a statement announcing its financial performance.

The FAA ordered U.S. airlines to stop flying the 787 two weeks ago, pending a resolution of the battery issues. Other worldwide aviation associations quickly followed suit, creating a worldwide ground stop for the airplane.

Boeing CEO Jim McNerney said the company was working feverishly to return the 787 to flight, even as it downplayed the financial impact of its grounding.

"Our first order of business for 2013 is to resolve the battery issue on the 787 and return the airplanes safely to service with our customers,” McNerney said in a statement. “At the same time, we remain focused on our ongoing priorities of profitable ramp-up in commercial airplane production, successful execution of our development programs and continued growth in core, adjacent and international defense and space markets."

McNerney said the 787 played a role in Boeing’s 2012 financial performance.

“Strong fourth-quarter operating performance capped a year of significant growth and solid execution, driving higher earnings and cash flow for our company," McNerney said. "In a year of considerable achievement, Boeing was the commercial aviation market leader for both orders and deliveries, with more than 600 airplanes delivered, including the first three Charleston-built 787 Dreamliners.

He added that Boeing had "significant new international orders for defense, space and security and more than 900 orders for the 737 MAX."

Boeing said it was continuing to produce 787s, but suspending deliveries of the airplanes to airlines until they are cleared to fly again by the FAA. The company said it was producing five 787s per month.

The National Transportation Safety Board (NTSB) says that the battery on a 787 that caught fire at Boston's Logan International Airport exhibited signs of accelerated temperature increases known as "thermal runaway" and short-circuiting.

The NTSB is conducting its own review of the 787.

The full Boeing earnings report can be read here.