=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2002/10/04/f= inancial1122EDT0072.DTL ---------------------------------------------------------------------- Friday, October 4, 2002 (AP) Boeing taking $250 million in charges for aviation slump DAVE CARPENTER, AP Business Writer (10-04) 13:46 PDT CHICAGO (AP) -- Declining aircraft values as a result of the longer-than-expected aviati= on slump prompted Boeing Co. to announce Friday that it is taking $250 million in third-quarter charges -- a $158 million setback to net profits. The world's largest commercial airplane manufacturer said the charges reflect the deteriorating credit ratings of its airline customers as well as lower collateral values of planes financed to carriers by Boeing Capital Corp., its financing arm. Boeing shares fell $2.30, or 6.7 percent, to close at $32.01 on the New York Stock Exchange. The stock has lost 37 percent of its value since reaching its post-Sept. 11 high of $51.07 last March. Chicago-based Boeing said the non-cash charges will reduce net earnings = by 20 cents a share when it discloses full quarterly results Oct. 16. Already, analysts surveyed by Thomson First Call had expected sharply decreased earnings as a result of the protracted industry downturn -- 66 cents a share, down from 88 cents a year ago. "It's very much to be expected, given that U.S. airlines are probably going to lose $8 billion to $9 billion this year, and worldwide there are over 2,500 aircraft in storage," said analyst Paul Nisbet of JSA Research. "It's a bleak picture, and it has been further deteriorating because companies like American have laid off more people and cut more flights and are activating fewer aircraft," he said. "As long as that sort of thing happens, you're going to have used aircraft values go down." Among the charges, Boeing plans a $110 million expense to increase the valuation allowance and strengthen reserves for Boeing Capital's receivables -- a precaution for possible airline delinquencies ahead. It also is taking a $79 million charge to write down its investment in equipment trust certificates involving United Airlines and the financing of new 777s to the ailing carrier. Boeing said the charge is based on the decline in United's credit ratings. The third adjustment, totaling $61 million, reflects the lower value of = 24 Boeing 727s that are being leased to a joint venture and converted from passenger aircraft to a cargo configuration. Boeing said the commercial airline business isn't bouncing back from last year's terrorist attacks the way it thought it would by now. "Boeing and BCC anticipated that airline traffic and profitability would gradually, but steadily, recover following Sept. 11, 2001," the company said. "However, recent announcements by the major domestic airlines and credit rating agencies indicate that this recovery will not be as rapid as anticipated." On the Net: www.boeing.com =20 ---------------------------------------------------------------------- Copyright 2002 AP