Boeing Co. proved in 2013 that a company could have one of its best years ever no matter what difficulties it faces along the way. Over the last year, Boeing experienced a series of embarrassments, including the temporary grounding of its flagship 787 Dreamliner after two battery incidents, as reported by the Wall Street Journal.
The company expects 2014 to be just another successful year, but when it comes to a long-term advancement and profits, Boeing needs to reduce the Dreamliner building costs and also meet its quite ambitious delivery schedules for six new commercial-jet models, which are planned to be released over the next six years.
As the Wall Street Journal reported, Boeing Co. managed to post its fourth consecutive increase in net new aircraft orders in 2013. This achievement also surpassed its previous record for jet deliveries, and is also expected to surpass the ones of Airbus Group for a second consecutive year. The company also announced that its operating profit at commercial-jet division until the end of September 2013 rose to 4.3 billion dollars, which is a 24% growth. Boeing Co. also forecast that its full-year profit is likely to top the high of 4.7 billion dollar, which was set in 2012.
The company experienced some difficulties associated with the 3½-month grounding of the Dreamliner jet, an unrelated fire aboard one of the new planes and a spate of reliability issues that have frustrated the aircrafts customers, as reported by the Wall Street Journal. Teal Group aerospace consulting firms Vice President Richard Aboulafia said: “At the end of the day airlines are focused on economics, and the economics [of the 787] look pretty good.”
The Dreamliner model was delayed by 3½ years thanks to design and manufacturing problems, which is one of the reasons why the cost issues are considered quite painful for the company. The units delivered so far are still too costly for Boeing Co., especially when compared to the price the company charges for them. The companys accounting method gives it the opportunity to post future profits by spreading out the costs and revenue acquired from the 1,300 Dreamliner units it expects to deliver over the next ten years. This “program accounting” is said by Boeing to be quite useful, considering the fact that huge sums are needed for new jetliners production.
Joseph Nadol, who is one of the analysts working for J.P. Morgan Chase & Co. said: “On a cash basis, [Boeing is] losing quite a bit of money on every [787] aircraft they ship.”
According to CNN Money, the current share price of Boeing Co. is 1.52% up, and its one-year return rate is 2.95% up. The 21 analysts offering 12-month price forecasts for Boeing Co. have a median target of 150.00, with a high estimate of 175.00 and a low estimate of 134.00. The median estimate represents a 6.75% increase from the last price of 140.51.