* Incurs $272-mln charge related to tanker program
* Keeps 2014 cash flow forecast
* Commercial aircraft deliveries rise 7 pct
* Revenue misses estimates for first time in six quarters
* Shares down 3 pct, biggest drag on Dow-30 index
(Adds details from conference call, analyst comment, updates
By Sweta Singh
July 23 Boeing Co reported a 52 percent
jump in quarterly profit, helped by higher commercial plane
deliveries and one-time tax gains, but investors were spooked by
rising costs in its military tanker program.
Boeing's shares fell as much as 3 percent after the company
said it took a $272-million charge related to its tanker program
and maintained its 2014 cash-flow forecast.
The stock was the biggest loser on the Dow Jones Industrial
index, which was down 0.41 percent by midday on
The planemaker said the charge reflected additional
engineering and system installation costs related to the aerial
tanker program, which has already raised concerns over cost
"To us it is worrying that Boeing is booking a charge of
this magnitude at a relatively early stage in this long-term
program, particularly given recent assurances from management
that everything was going to plan, RBC Capital Markets analyst
Robert Stallard wrote in a note to clients.
The planemaker retained its cash flow outlook at $6.25
billion for the year.
"This may create doubt as to whether Boeing can generate the
cash flow that many are hoping for," Stallard wrote.
The company delivered 181 aircraft in the second quarter.
This included 30 Dreamliner jets and 124 narrow-body 737s.
The company's ability to churn out Dreamliner jets is
crucial to its financial performance this year as it is relying
on commercial jets to offset a weak defense business.
While Boeing still loses money on each 787 it builds, it
gets closer to breaking even as production increases.
The planemaker delivered its first stretched Dreamliner
787-9 in the quarter.
Boeing and its European rival Airbus Group NV have
been ramping up production to cater to increasing demand from
airlines. Boeing is going full throttle and said in January it
was producing 10 Dreamliner jets per month.
Boeing's delivery forecast shows that the planemaker is on
track to deliver a record 715-725 jetliners this year, having
delivered 342 in the first half.
The company's net income rose to $1.65 billion, or $2.24 per
share, from $1.09 billion, or $1.41 per share, a year earlier.
It recorded tax benefits of $524 million in the quarter,
which included a pre-announced benefit of $116 million.
Core earnings, which exclude some pension and other costs,
rose to $2.42 per share from $1.67.
Edward Jones Equity Research Christian Mayes said investors
were been looking for more improvement in the company's
"While the headline earnings number looked good at first
glance, it turned out that it was helped to a large degree by
one-time tax benefits," he said.
Revenue rose 1 percent to $22.05 billion, missing the
average analyst estimate for the first time in six quarters.
Analysts on average had expected earnings of $2.01 per share
on revenue of $22.23 billion, according to Thomson Reuters
Revenue from commercial airplanes business was up 5 percent,
while revenue from its defense, aerospace and security division
fell 5 percent.
Total backlog of $440 billion as of June 30 was unchanged
from the start of the quarter, the company said.
The company also increased its 2014 core earnings forecast
to $7.90-$8.10 per share from its previous forecast of
$7.15-$7.35 per share.
Boeing Chief Executive James McNerney said on a conference
call with analysts that he has no plans to retire even as he
turns 65 next month.
"We're continuing to build the succession plan and
alternatives to succeed me eventually, but there's no discussion
of it yet," he said.
(Additional reporting by Bill Rigby; Editing by Savio D'Souza
and Saumyadeb Chakrabarty)