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