Updated from 9:17 a.m. EDT

At

Boeing's

(BA) - Get Report

annual meeting with analysts, the company faced the music surrounding ethical lapses and government contracts, but hit the same high notes it first sounded in releasing first-quarter earnings three weeks ago.

On Wednesday morning, CEO Harry Stonecipher and other Boeing executives frankly discussed the state of the company, which has been reeling for the last six months, with about 150 Wall Street analysts and reporters. The main area of concern surrounds the company's standing in the eyes of the Department of Defense after a Boeing executive pleaded guilty as part of an investigation into allegations the company used job offers to improperly influence the outcome of government contracts.

The scandal has impacted Boeing's $23.5 billion contract to convert the 767 passenger jet into refueling tankers for the Air Force. In the last month, two reports from the Pentagon have recommended that the government cancel its contract with Boeing, saying the 100-tanker order overcharged the government and was unnecessary, and that alternatives should be explored.

But Stonecipher stressed that the controversy around the contract was overblown and that the Air Force still wanted the tankers. In reaction to the comments, shares of Boeing rose 98 cents, or 2.3%, to $43.90.

"The tanker is not dead," said Stonecipher. "We have a customer who wants them very badly, and that's the Air Force, they're the customer. The customer has not changed their mind one iota about wanting the 767 tanker program that made its way through Congress ... and was in the 2004 defense spending bill."

Furthermore, Stonecipher said that a report from the National Defense University, released Wednesday morning, contradicted an earlier report from the Defense Science Board that said the tankers were unnecessary. There are other positive signals -- last week, the House of Representatives' Armed Services Committee passed the 2005 Defense Authorization Bill, which set aside $95 million to expedite the Air Force's plans to lease and buy tankers.

Losing the contract would have serious repercussions for Boeing. In a filing with the

Securities and Exchange Commission

, the company warned it may have to take a $270 million to $300 million charge to terminate the program. Furthermore, the fate of the contract will also determine the fate of the 767 passenger jet, which Boeing wants to stop manufacturing at some point.

But the company's contract -- and its standing in Washington, D.C. -- remains in limbo. In April, Darleen Druyun, a former Boeing vice president, pleaded guilty to a federal conspiracy charge as part of a government investigation into Boeing's tanker deal with the Air Force. As a result of the investigation, which triggered the departure of former CFO Michael Sears and CEO Phil Condit, Boeing has been suspended from bidding on Air Force contracts.

In addition to signing the 767 tanker deal, one of Stonecipher's main goals has been to lift the suspension, which has so far been unsuccessful. Not only has the suspension cost the company opportunities in the U.S., it has cost the company business elsewhere. On the call, Stonecipher said the suspension caused Australian officials to opt for rival Airbus, a unit of

EADS

, when it put a tanker contract up for bid earlier in the year.

With more allegations coming against Boeing -- including memos that seem to indicate that Condit was aware of the ethical lapses -- the government continues to investigate, blocking progress on lifting the suspension.

"I thought I would be standing here today and say we're finished with that and we're going forward. But we're not," said Stonecipher. "And we're not because we're working ... we're trying to respond to everything

the government asks for. It continues to evolve around what's going on with the U.S. attorneys. We have no choice but to comply and see where we go with this thing. When it's over, it's over."

As with the tanker deal, Boeing said it was optimistic that the Air Force would ultimately lift the suspension in time to let it bid on major contracts. The company stressed its view that the furor around the tanker deal was a political issue driven by opponents of the Air Force, like Sen. John McCain (R-Ariz.), rather than a breakdown in its relationship with the Pentagon.

"The Air Force has chosen to let the ongoing investigation play out before lifting us off suspension," said James Bell, CFO. "Certainly our customer has made it clear they want us to have assured access to the space. We will have the opportunity to compete."

While Boeing accentuated the positive, the company gave little in the way of additional guidance, having raised expectations three weeks ago when it released earnings. Ultimately, there is little the company can do except wait for Defense Secretary Donald Rumsfeld to determine the outcome of the tanker deal, expected sometime this year.

Stonecipher, who is 67 years old and returned to the company after retiring in 2002, will likely step down once the crisis passes. He said the company's succession plan will be based on the one used by

General Electric

(GE) - Get Report

, in which candidates are reviewed internally, but remain unannounced until a CEO is officially picked.

"I'm not going to work one day longer than I have to," said Stonecipher.

Given recent events, Stonecipher has a few more days ahead of him.