This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Boeing Looks to Build More 737s

SEATTLE ( TheStreet) -- Boeing (BA - Get Report) said it is evaluating an increase in production of its 737, the mainstay of its commercial aircraft business.

The company has a "solid backlog" of orders for the 737, which is in fact "oversold" over the next two years, said CEO Jim McNerney on an earnings conference call. "That is the bias in the evaluation right now," he said, noting a decision will be made in the current quarter on whether to increase production from the current 31 aircraft per month. "These rate adjustments are significant business decisions for us."

Despite an 18% drop in first quarter earnings to $519 million, excluding items, Boeing said its outlook is favorable. Development of the 787 is on schedule, with the first delivery expected by the end of the year. Production is expected to reach ten a month by the end of 2013, with three of those built at Boeing's new Charleston, S.C. facility, which is under construction.

"Many of our airline customers are positioning for this recovery," McNerney said. While some customers continue to defer deliveries, "we are seeing growing demand from other customers for those delivery slots," he said. "The rate of acceleration in first quarter was notably higher than average (and) the backlog of deferral requests continues to decrease."

On the defense side, he cautioned, "The defense department and other agencies continue to face significant budget pressures [but] the 2010 defense budget and 2011 budget request contains strong support for many of our programs." Additionally, he said, international demand is strong.

Early this month, Australian carrier Virgin Blue agreed to purchase as many as 105 new 737s. It placed a firm order for 50 planes, with options for 25 more and future purchase rights for another 30. Boeing is expected to begin deliveries in June 2011.

Analyst Saj Ahmad of London-based FBE Aerospace said he expects 737 production to increase to about 35 jets a month as low-cost airlines continue to place orders. "These carriers that have better near term cash flow and traffic volumes to absorb new capacity," he said. "Factor in ease of finance on narrowbody jets like the 737 and A320 and it's easy to see why rates will go up."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BA $118.88 -0.49%
AAPL $94.99 -0.02%
FB $99.54 -0.21%
GOOG $678.11 -0.68%
TSLA $148.25 0.18%


Chart of I:DJI
DOW 16,014.38 -12.67 -0.08%
S&P 500 1,852.21 -1.23 -0.07%
NASDAQ 4,268.7630 -14.99 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs