Boeing Co. turned in a strong first quarter, beating analysts’ projections, despite problems with 787 batteries that grounded the fleet in January.
Boeing recorded $18.9 billion in revenue, down 3 percent from a year ago. Net income rose 20 percent, however, to $1.1 billion.
Higher revenue from the delivery of 737 and 777 orders was offset by lower 787 deliveries because of problems with the aircraft’s batteries.
Those issues led not only to an end to deliveries, but prompted the Federal Aviation Administration and foreign governments to ground the fleet of 787 Dreamliners.
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Boeing chairman, CEO and president Jim McNerney said the company pulled in hundreds of experts from across Boeing and elsewhere to work “day and night” to identify the factors that could have caused the lithium batteries to fail.
On Friday, regulators approved Boeing’s proposal to fix the problem, and the company has started to install the improved systems on the fleet and on new production 787s.
Boeing expects to complete retrofits on the bulk of the fleet by mid-May, McNerney said.
It also will restart 787 deliveries.
The costs to fix the problem were included partly in Boeing’s research and development costs in the quarter. Costs will be spread out over an accounting block of about 1,100 airplanes, said Boeing chief financial officer Greg Smith.
He declined to provide a figure on how much the fixes will cost the company.
“We managed to absorb this,” Smith said, by reshifting resources and expertise.
Despite 787 delivery delays in the quarter, Boeing still expects to hit its delivery target of more than 60 787s for the year, McNerney said.
It also plans to meet its revenue guidance for the year of $82 billion to $85 billion.
It also still expects commercial airplane deliveries to total 635 to 645 planes this year.
Boeing is talking with 787 customers in the wake of their losses due to the grounded fleet.
“There are no contractual obligations there,” McNerney said.
Having said that, the company will work with customers, he said.
“There’s a variety of ways we can work with them to ensure the disruption doesn’t hurt their results in their operation more than it needs to,” McNerney said. That can vary by customer.
During the quarter, Boeing’s backlog hit a record $392 billion, which included $20 billion of net orders.
That includes net orders for 209 commercial airplanes.
Boeing’s commercial aircraft performance is important to Spirit AeroSystems, which builds parts of all Boeing commercial aircraft.
A business case for a 787-10X, a 320-seat stretch version of the 787-9, continues to strengthen, McNerney said.
The company expects a potential launch of the 787-10 later this year, McNerney said.
A business case for a 777X also continues to mature, McNerney said. The plane would compete with the Airbus A350 and have composite wings and a new engine.
The range and efficiency provided by the engine and wing combination will be significant, McNerney said.
“We’re pretty far down that evaluation, and we’re excited about what that will be,” he said.
Composite wings are more efficient, more aerodynamic and lighter weight than aluminum ones.
“The bigger the composite wing gets, the more efficient it becomes, and this is a big composite wing,” McNerney said.
He declined to give specific performance expectations.
The timing to launch the program is up to Boeing’s board of directors.
“But it wouldn’t be a shock if this was settled before the end of the year,” McNerney said.