Boeing, EADS outlook brightens for rest of 2005 - UPDATE 1
SAN FRANCISCO (XFNews) - Boeing Co. and European Aeronautic Defence and Space Co. boosted their profit outlooks for the year on Wednesday as the two rival aerospace giants benefited from a resuscitated global airline industry and their considerable defense businesses.
The strength of overseas demand is often lost in the glare of the U.S. airline industry's problems with jet fuel prices, underfunded pensions and labor costs that executives say must be lower to emerge from this downturn.
"In Europe the trend is good, and it is excellent in the Middle East," EADS said. "It is even better in Asia-Pacific with its huge long-term traffic growth potential."
And EADS , which owns 80% of Airbus, indicated its space and defense operations will be stronger during the second half of the year.
With aircraft deliveries set for 360 in 2005, EADS' profit outlook for the year now stands at 1.50 euro per share. Chicago-headquartered Boeing , however, appears to have to face another year of Airbus topping its jet deliveries. Boeing expects to deliver 320 planes this year, rising to 395 next year. Airbus beat Boeing on that measure during the past two years, as well.
Boeing now expects earnings in a range of $2.75 to $2.85 a share, up from a previous $2.40 to $2.60 a share range.
"Commercial markets continue to gain strength which has enabled us to raise our financial outlook for Boeing commercial airplanes and though slower defense budget growth will affect near-term revenue growth, Boeing's defense markets remain strong," said Boeing Chief Financial Officer James Bell during the quarterly conference call.
The overall strength in demand from not just airlines but also leasing firms was on display earlier this summer at the Paris Air Show.
Wednesday's numbers reinforced the improving demand from carriers around the world.
"It always seems to happen that when a few airlines start ordering, the entire world fleet starts ordering," said JSA Research analyst Paul Nisbet. "They're all afraid they won't get near-term delivery slots."
Both companies are battling hard for commercial business this year. Boeing is pushing its next new jet, the 787 Dreamliner, while Airbus is going after another end of the market with a superjumbo jet that can carry more than 600 passengers, the A380. Neither is sitting still, either, when it comes to the new planes from their rival. Boeing is looking at launching an even bigger than its 747 while Airbus is moving ahead with its smaller A350.