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Boeing (BA)
Boeing's Profit Takes Flight
The Boeing Company (BA: Charts, News, Offers) beat out Wall Street expectations this quarter with a 17% rise in profit. The world's second-largest commercial plane manufacturer saw its earnings increase from $852 million a year ago to $998 million. It also managed to boost its total revenue by 1% to $17.15 billion. However, Boeing also announced its fifth release date delay of its next-generation, commercial aircraft, the 787 Dreamliner. How was Boeing able to garner such impressive quarter results? What are the long-term ramifications of yet another delay to the Dreamliner project?
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There were two primary causes for Boeing's jump in profit. First, the airplane maker experienced considerable growth in its defense contract business. The aircraft company's defense sales rose 9% to $8.7 billion. Boeing saw the biggest increase in order shipments with its Apache helicopters and fighter jets. Second, Boeing has undergone extensive cost cutting management, which has helped improve its profit margin. The Chicago-based company is expanding its cost-efficiency efforts further with future plans to cut 10,000 jobs and scale back production of certain planes. The combination of strong defense sales and extensive cost-cutting has really helped Boeing's quarterly performance.
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In addition to the aircraft manufacturer's impressive quarterly profit report, it also announced another delay to the 787 Dreamliner project. Each deadline setback is creating higher research and development costs, which is becoming an increasing concern for investors. The Dreamliner project has been pushed back two years since its conception, and customers have already been canceling orders due to the prior delays. However, Boeing seems optimistic about the project's progress, and noted in its quarterly report that engineers have found a technical solution to an earlier reinforcement issue.
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Overall, Boeing did pretty well this quarter despite some deadline disappointments. It managed to increase profit while cutting costs and increasing defense sales. Unfortunately, Boeing has encountered continued difficulties with its Dreamliner project, and it appears that a large portion of Boeing's future commercial airline success hinges on the 787 Dreamliner project. The ongoing Dreamliner setbacks have led to an increasing consumption of company resources and outside skepticism. Only time will tell if the 787 Dreamliner can live up to the "dream" like expectations that surround the project.
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