CHICAGO—Boeing Co. reports third-quarter results on Wednesday morning. Investors will be eager to find out when it will begin making money on its new 787. The forward-looking news about the 787, and also about Boeing's softening defense business, are likely to overshadow net income that analysts expect will be slightly smaller than it was at the same time last year.
WHAT TO WATCH FOR: Boeing has said it will lay out the accounting for its new 787, which it delivered to a customer for the first time last month. The plane is more than three years late. Flight testing dragged on longer than Boeing had expected. That money is already spent and isn't coming back. But Boeing will explain how many planes it will need to deliver before it breaks even on an operating basis.
Boeing is expected to release an accounting block on Wednesday, meaning it will say how many planes it reasonably expects to sell based on current and projected orders, and whether it expects to make money on them. Boeing has orders for almost 800 of the planes, and it will add some projected orders, too. It has said it does not expect to lose money on this initial block.
Boeing is aiming to build 10 new 787s per month by the end of 2013. That's faster than any other large airplane has ever been produced. It's normal for production of a new plane to take a while to ramp up.
UBS analyst David Strauss wrote in a note last week that avoiding 787 losses depends on Boeing learning quickly how to make the 787 efficiently. If 787 production improves at the same rate as the 777 after its first delivery in 1995, the 787 will cost Boeing $4 billion in cash per year through 2015, Strauss wrote. Faster improvements would turn the 787 into a cash generator sooner.
WHY IT MATTERS: Boeing believes the 787, with its lighter-weight construction and improved fuel efficiency, will be a game-changing plane for airlines, and it has invested in the plane accordingly. Selling the plane has not been a problem. But making it has been. Investors will be eager to see a payoff from this long, risky process.
WHAT'S EXPECTED: Analysts surveyed by FactSet expect a profit of $820.8 million, or $1.10 per share, on revenue of $17.78 billion.
LAST YEAR'S QUARTER: A profit of $837 million, or $1.12 per share. Revenue rose 2 percent to $16.97 billion.
