Thursday, October 21, 2010

Boeing profit boosted by strong aircraft orders

Boeing has attracted 241 orders for its commercial planes in the three months to September.Boeing, the world's largest plane maker, bounced back into profit in the third quarter of 2010 and booked a net 221 plane orders in the period.The company made net profits of $837m (£531m) during the three months to September, after a loss of $1.56bn for the same period in 2009.Much of last year's loss was due to a one-off charge because of delays to new planes.Boeing's commercial aircraft division, which competes fiercely with Europe's Airbus, has orders for 3,400 craft on its books, worth $255bn, including 847 orders for the Dreamliner. Revenue rose 11% higher to $8.7bn.But the defence division fared less well, with revenue falling 6% to $8.2bn.Boeing's civilian division is making a profit again and the plane industry is bouncing back after a tough few months when airlines were reluctant to place new orders.But it seems the US aerospace giant's defence division is having a much tougher time.

However, that is an illusion.

Over the past decade, global military spending has grown by about 50%, with even more dramatic growth in US military spending.Boeing's defence business has thus expanded greatly, so even though a slowdown is now inevitable it will remain much greater than it used to be.The results were well-received by investors, however.Boeing shares were the best performer on the Dow Jones index constituents, rising by more than 3% to close at $71.36.The dip in performance from defence was viewed as outweighed by the improvement in commercial aircraft orders.

"So far, the increase in the commercial side is more than compensating for the softening defence business," said Kenneth Herbert, aerospace analyst, Wedbush Securities."Airlines are starting to significantly order jets again after essentially taking 18 months off."Wednesday also saw better-than-expected results from two Boeing customers, Delta Air Lines and US Airways, confirming better times across the aviation sector.

20 October 2010 Last updated at 21:49 ET

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