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Boeing management laid out a relatively steady forecast for 2010 in its quarterly earnings teleconference Wednesday, though executives acknowledged that it promises to be a challenging and expensive year for the planemaker.
Financial guidance for the year ahead was cautious, but prospects for future sales and production were as upbeat as could be expected given the current airline market downturn.
"The global recession has clearly affected our airline customers.... It will take some time for economic indicators to rebound significantly," said Boeing chairman and CEO Jim McNerney. "Despite the challenging environment, our commercial backlog (of orders) is holding strong."
Production in the Puget Sound region factories is expected to dip no more than previously forecast.
Assuming no major glitches during flight tests, the planemaker anticipates first deliveries of both the 787 Dreamliner and the 747-8 jumbo jet by year end.
During the year, spending on capital expenses and research and development will add up to nearly $6 billion. That includes about $700 million for expanding Boeing's manufacturing base in South Carolina and about $4 billion in development costs, primarily on the 787 and the 747-8.
Management will also likely decide on whether to invest in development of a new engine for the 737, McNerney said.
Profit margins in the commercial airplane division are projected to slip from around 12 percent of revenue in 2009 to about 7 percent in 2010.
Prospects for delivering airplanes remain steady.
McNerney said the pace of deferral requests has slackened, after customers in 2009 canceled 121 orders and deferred some 271 further orders to a later date.
In 2010, Boeing projects delivering 460 to 465 airplanes, about 20 fewer than last year. Those delivery slots are already sold out, with some overbooking that could cover cancellations.
The decrease in deliveries from 2009 will be almost entirely in the more expensive widebodies, including about a dozen fewer 777s because of a planned production cut coming in June. McNerney said Boeing will hold its current production rate for the 737 single-aisle jet "for the foreseeable future."
The projection presumes only a "few" Dreamliner and jumbo jet deliveries by year end, perhaps about five 787s and a couple of new 747-8s.
By the end of 2010, the company expects to have, in addition to four 787s in process of final assembly and six flight test airplanes, about 20 additional completed Dreamliners rolled out.
But before delivery to customers, those early production planes will have to be modified with various changes mandated during the certification process. Some of them will be modified in Everett, some in San Antonio.
More than a third of Boeing's projected capital expenses for the year will be devoted to building its second 787 final assembly line and jet delivery center in Charleston, S.C.
The 2010 forecast of about $4 billion for research and development is down from more than $6 billion in 2009, when spending ballooned due to high extra costs on the company's two new airplane programs.
Delays and production issues with the 787 Dreamliner in 2009 forced an additional accounting charge of $2.7 billion beyond prior projections, while the 747 added $1.4 billion in charges.
Looking further ahead, chief financial officer James Bell said research and development costs will remain high in 2011, about $3.5 billion, because the company will still be funding development work on the 787-9, the 747-8 passenger model and also potentially investing more in putting a new engine on the 737.
