SEATTLE ( TheStreet) -- Boeing ( BA) 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."
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."
Despite the decline in first quarter income, Boeing beat estimates, earning 70 cents a share. Analysts surveyed by Thomson Reuters had estimated 64 cents. Revenue fell 8% to $15.2 billion, in line with estimates. The results include a charge of 20 cents a share resulting from the new health care law. Airplane deliveries fell to 108 from 121 as the company made fewer 747 deliveries than it had planned and faced seat supplier challenges. Still, the operating margin at Boeing Commercial Aircraft increased by 9.1% due to stronger operating performance. In early afternoon trading, Boeing stock was up $2.67 a share to $74.08. -- Written by Ted Reed in Charlotte, N.C.