=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/2003/07/23/f= inancial1736EDT0330.DTL ---------------------------------------------------------------------- Wednesday, July 23, 2003 (AP) Boeing loses $192 million, cuts outlook, ponders scrapping 757 DAVE CARPENTER, AP Business Writer (07-23) 14:36 PDT CHICAGO (AP) -- Boeing Co. posted a second straight quarterly loss Wednesday -- $192 million -- and cut its estimate for next year's profits and jet deliveries in a sputtering commercial aviation market it doesn't foresee recovering before 2005. Struggling to keep its airplane business profitable during the worst slu= mp in the industry's history, Boeing acknowledged the possibility it may be forced to scrap the once-popular 757, which hasn't had any orders since 2001. Company executives held out hope that sales campaigns under way in China might drum up new business in order to continue making the single-aisle plane, which has been in service for 20 years. But they said new orders have vanished and the backlog of orders is dwindling. A similar fate could await the money-losing 717 -- the 100-passenger pla= ne that Boeing almost abandoned in 2001. "Obviously, if you don't have airplanes to build ... we are not going to build them on spec," CEO Phil Condit said on a conference call. Second-quarter results were dominated by a $1.1 billion charge, announced last week, reflecting the weak demand and high costs of its satellite and launch businesses. The world's largest aerospace company lowered its estimate for next year= 's earnings by 35 cents per share to a range of $1.75 to $1.95 a share. It also narrowed its forecast for 2004 deliveries to between 275 and 290 airplanes -- tightened from 275 to 300 -- although it said it remains on track to deliver 280 planes this year. It pegged revenue at $52 billion for next year instead of a range of $52 billion to $54 billion. The loss for the April-through-June period amounted to 24 cents a share, compared with earnings of $779 million, or 96 cents a share, for the same period a year earlier. That beat the 43 cent consensus estimate of analysts surveyed by Thomson First Call. Revenues slid 8 percent to $12.8 billion from $13.9 billion, a decline marked by a 24 percent drop in the airplanes division to $5.8 billion. The sting of the first back-to-back losses in nearly six years was partly eased by continued strength in Boeing's flourishing military-contract business. With revenues jumping 7 percent to $6.6 billion, the defense-dominated unit is on a pace to easily surpass the airplane division as the company's No. 1 revenue-generating unit this year. "Defense is the one very bright spot of the company, because of the buoyant U.S. defense market and their strong international market standing," said Richard Aboulafia, an analyst for the Teal Group. "It'll simply have to carry the other stuff, because the commercial jet market looks depressed for at least the next two years and commercial space looks depressed for a very long time." Despite the severe aviation slump that dates to the 2001 terrorist attacks, Boeing earned $313 million from operations at the Seattle-based airplane unit, thanks largely to cost cuts. But that figure was down 44 percent from a year ago, reflecting 38 fewer airplane deliveries in the quarter and higher pension expenses. The company would have been profitable for the quarter but for the huge charge announced last week at the space and defense unit, prompted by a severe drop-off in demand for commercial satellites along with problems at its satellite factory. Condit assured analysts that airlines' interest in Boeing's proposed new 7E7 jet is "good enough that we can generate a launch." A final decision is expected in 2004. He cited some encouraging signs in the global air market, mostly in the form of increased traffic in Asia in the wake of the SARS epidemic. But Boeing still doesn't forecast an industry revival until at least 2005, particularly with "not a lot of bright signs in North America at this point other than in the low-cost carriers," Condit said. Chief financial officer Mike Sears said the company would probably take a charge of roughly $200 million if the 757 program is eliminated. The company currently is making just one of the single-aisle planes a month and has a backlog of only 18 unfilled orders -- 11 with Continental Airlines, which said last week it was discussing the terms with Boeing. For the first six months, the company had net a loss of $670 million, or 84 cents a share, compared with a loss of $470 million, or 58 cents, a year earlier. Revenues declined 10 percent to $25 billion from $27.7 billion. Boeing shares rose 12 cents to close at $32.69 on the New York Stock Exchange. On the Net: www.boeing.com =20 ---------------------------------------------------------------------- Copyright 2003 AP