Boeing Co ended a turbulent 2003 by nearly doubling its earnings in the fourth quarter thanks to a US$1.1 billion federal tax refund that offset the continuing decline of its once-dominant commercial airplane business.
The refund gave Boeing a profit of US$1.11 billion for the quarter and kept it from falling into the red for the year, which saw it drop to No. 2 in commercial airplane manufacturing behind Airbus.
The results also were notable for confirming Boeing's defense unit as the company's biggest business as measured by annual revenue. The military contracting business continued its steady growth and weathered a series of contract controversies to surpass commercial airplanes for the first time.
Net earnings for the last three months of the year amounted to US$1.37 per share, up from US$590 million, or US$0.73 a share, a year earlier.
Results included the income-tax refund and interest from the Internal Revenue Service totaling US$1.1 billion, related to a partial settlement of tax years 1992 to 1997. Excluding the refund, earnings were US$0.50 a share, or US$0.04 more than the consensus estimate of analysts surveyed by Thomson First Call. Revenues fell 3.5 percent to US$13.2 billion from US$13.7 billion.
The tax refund was a timely financial boost during what has been an ugly period for the Chicago-based company.
Since November, Boeing has fired two top executives for alleged ethical misconduct, seen the Pentagon suspend plans to acquire 100 of its planes for use as air-refueling tankers, switched CEOs after a series of controversies, been overtaken by Airbus in the commercial jet market and lost out to its European rival on a US$24 billion deal to supply military planes to Britain.
The company provided hope for the future by moving ahead with its first new jet design in 13 years, the fuel-efficient 7E7 Dreamliner. But even that positive news has been clouded by the Pentagon's ongoing review of the much-criticized tanker deal, which is valued at US$16 billion to US$18 billion and is vital to keeping Boeing's slumping 767 production line alive.
"This past year was notable both for the solid performance turned in by most of our busi-nesses, as well as the challenges we faced," said CEO Harry Stonecipher, who returned from retirement after Phil Condit's abrupt resignation last month.
"While there is no doubt that the emergence of ethical issues during the year was deeply disappointing to all of us, I feel strongly that we acted quickly and aggressively to address the issues," he said.
The company's Seattle-based commercial airplane unit saw revenues fall 8 percent for the quarter to US$5.8 billion and tumble 21 percent for last year to US$22.4 billion, reflecting the travails of its airline customers since 2001. Operating earnings from the unit fell 3 percent.
Boeing delivered 71 commercial airplanes in the fourth quarter for a total of 281 for last year -- down 100 from 2002 -- and said it now anticipates 285 this year and "about the same" next year before business picks up in 2006. Airbus surpassed it for the first time with 305 last year and estimates about 300 deliveries this year.
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