Boeing, the world's largest aircraft maker and biggest US exporter, has issued a profit warning after reporting a $478m (£303m) loss for the first quarter.
Plane demand from airlines is down
A "severe" air travel downturn, which has forced airlines to cut orders and pushed some carriers into bankruptcy, knocked profits on the civilian side of Boeing's business.
The company revised down forecasted earnings per share for 2003 to between $1.70 and $1.90 from $1.90 and $2.10.
"In the commercial aviation market, the war in Iraq, increased security costs, the emergence of severe acute respiratory syndrome (Sars) and airline
industry restructuring together create a dynamic environment; it is too early to reach conclusions regarding the ultimate impact," said Boeing.
Military spending was "quite strong" which the company said would "somewhat offset" the losses on passenger jets and their satellite business.
The loss, which covers write-offs on acquisitions and aircraft held by Boeing leasing arm, was in line with analysts' expectations.
First quarter revenues at its military arm, the Integrated Defense Systems (IDS), rose 18% to $6.3bn while those for commercial planes fell 31% to $5.7bn.
This left the overall revenue figure down 11% on the same quarter last year.
The company maintained its delivery forecast for 2003 at 280 planes, the lowest number since 1996, and between 275 and 300 planes next year.
Boeing's shares gained 56 cents to $28.36 in early trade.
Expectations that Airbus will overtake Boeing in deliveries for the first time this year pushed shares to a eight-year low of $24.73 recently.