Boeing Earnings Preview: Revenue Rises On More Aircraft Sales

The Boeing Co. (NYSE: BA), the largest U.S. airplane and military manufacturer, is expected to report higher first-quarter earnings as the sale of more high-profit aircraft offsets rising pension costs.

Chicago-based Boeing, which will report earnings Wednesday before markets open, will have earnings per share of 93.7 cents, up from 78 cents in the prior year, according to an analyst forecast from Reuters. Revenue is expected to increase to $18.3 billion, up 23 percent from $14.9 billion from the prior year.

Boeing said it delivered 137 commercial aircraft through March, up from 104 aircraft in the same period last year. The bulk of the orders were 99 of its Boeing 737 aircraft, a mid-size plane with a high profit margin, which the company has been selling since 1967.

When they ramp production on the 737, they make a ton of money, said Neal Dihora, an analyst with Morningstar Inc.

The company sold five of its new Boeing 787 airliners for list prices of around $200 million in the first quarter, up from two in the fourth quarter of 2011, which will boost revenue. But the massive planes have low profit margins because Boeing spent billions on research and development.

In the first quarter, Boeing had 385 commercial plane orders, beating its main rival, European planemaker Airbus (EPA: EAD)'s 97 orders. But in 2011, Airbus had 1,419 orders to Boeing's 805.

Last year, they lost to Airbus because they were late to that fuel efficient, single-aisle airplane, said Dihora. But when you look at dual-aisle, they're dominating.

This year, Boeing faces rising pension costs for employees. In January, the company said it expects to pay an increase of 83 cents per share in 2012 compared to the prior year. For the year, the aircraft maker expects earnings of $4.05 to $4.25 per share, below the analyst consensus of $4.90 per share.

Further uncertainty comes from the U.S. government, which may cut back on military spending. In the first quarter, Boeing said it had 33 deliveries in its defense and space divisions in the first quarter, including 12 F018 and EA-18G fighter jets, 10 Chinook helicopters and five F-15 fighters.

“Boeing’s got some great technology, said Dihora. You just have to get it through the political system.”

Shares of Boeing were down 69 cents to $72.86 at Monday's market close.