The three-month grounding of the Boeing 787 fleet caused Boeing to miss a first quarter revenue target, but improved core operating margins yielded a 5% increase in earnings compared to the same period a year ago.
Overall revenues declined 3% year-over-year to $18.9 billion during the quarter despite higher 737 and 777 deliveries as part of planned rate increases.
Boeing had intended to deliver 787s at a rate of at least five per month during the first quarter, but delivered only one due to the grounding caused by two unsolved battery incidents in January.
Boeing is now installing redesigned battery kits across the fleet, and the company believes it can catch up on the roughly 14 missed deliveries by the end of the year.
"Our outlook for the year is positive, and our financial and delivery guidance is reaffirmed," says Boeing chairman, president and chief executive Jim McNerney.
Boeing still intends to deliver 65 787s by the end of the year, the same as the company forecast in late January after the grounding began.
Cash flow during the quarter declined from $837 million a year ago to $524 million as a result of higher 787 inventory, Boeing says. The company's overall cash position also declined in the quarter as a result of paying down maturing debt. The balance of cash and marketable securities stood at $11.8 billion by quarter-end, compared to $13.5 billion at the end of last year's fourth quarter.
Both of Boeing's operating divisions saw improving operating margins during the quarter, with the Commercial Airplanes (BCA) unit growing by 1.5 percentage points year over year and the Defense, Space and Security (BDS) unit improving by 1.3 percentage points.
BCA revenues dropped by 2% to $10.7 billion year-over-year, although operating earnings jumped 13% to $1.22 billion. The story was very similar in the BDS segment, which posted a 1% decline in revenues to $8.11 billion and a 12% increase in operating earnings.