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Last Updated: Wednesday, 27 October, 2004, 14:39 GMT 15:39 UK
Weapons sales boost Boeing profit
Boeing Globemaster III aircraft
Increased US defence spending is underpinning Boeing profits
US aircraft and defence company Boeing has reported a 78% jump in quarterly profits, driven by increased demand for equipment from the armed forces.

Net income in the third quarter ending 30 September was $456m (248m) from $256m a year earlier, topping market forecasts. Sales added 8% to $13.15bn.

Boeing said the business outlook is bright, raising its 2004 profit target.

The future of its commercial aircraft division, which is battling Europe's Airbus, also seems to be rosier.

"Defence and intelligence markets are expected to remain strong in 2004 and 2005," Boeing explained, adding that the "commercial airplane markets are improving with higher deliveries forecast for 2005 and further delivery recovery in 2006."

Better times?

The upbeat comments will help reassure investors, whose confidence in the company had been hit by the fact that its competitor Airbus sold more planes than Boeing last year for the first time.

Shares in Boeing added 1.2% to $50.60 during early trading in New York.

The firm, however, warns that even though the market has improved, uncertainties persist.

"The airline industry environment remains mixed with trends varying between carriers and region.

"A number of low-cost carriers continue to gain market share, remain profitable and order new airplanes.

"The global economy and air traffic trends are recovering and interest from airlines in adding capacity to handle higher traffic volume is increasing.

"However, higher fuel prices have dampened airline profits, particularly in the United States."

Head to head

The firm expects to deliver 320 commercial planes in 2005.

This figure is at the top end of its forecasts but earnings at the business are still under pressure as demand is highest for the smaller and less expensive 737 planes.

Sales dipped by 8% to $4.64bn at the Commercial Airplanes' division during the third quarter.

Cost cutting helped lift the profit margin to 3.6%.

Boeing and Airbus are both gearing up for the launch of new passenger jets - Boeing's 7E7 "Dreamliner" and Airbus' A380 super jumbo - and their success is seen as critical to both companies' future performance.

Boeing said that interest in its new 7E7 Dreamliner "remains strong with firm orders for 52 airplanes and accepted proposals from airlines around the world".

Sales at its Integrated Defence Systems unit rose by 13% to $8.26bn in the third quarter, with a profit margin of almost 10%.

That has helped to offset increasing expenditure on commercial satellite programmes, Boeing said.

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