Boeing earnings up, but reports higher costs on tanker

Boeing reported a jump in second-quarter profits today on higher commercial airplane deliveries but said costs on a closely-watched Air Force tanker contract had risen again.

The US aerospace giant reported net income of USD 2.2 billion, up 25.6 per cent. Revenues rose 5.2 per cent to USD 24.3 billion.

Boeing set aside USD 418 million in additional funds for the KC-46 tanker, an Air Force plane that has repeatedly suffered cost overruns.

The latest cost increases were for incorporating changes into test and early-build aircraft and for additional expenses in late stage testing and certification.

Boeing said it expects to deliver the first tanker to the Air Force in October. Boeing's commercial plane business prospered on an uptick in deliveries, as well as higher profit margins compared with the year-ago period as it has increased production rates on its most popular offerings.

Boeing has benefitted from a multi-year surge in commercial jet demand as US carriers refresh their fleets and airlines in developing and emerging countries boost orders.

During the first quarter, Boeing delivered new planes to Ethiopian Airlines and Xiamen Airlines, among others. Boeing lifted its full-year revenue forecast to USD 97 billion - USD 99 billion, up USD 1 billion from the prior range.

It projected slightly higher operating margins in commercial planes but slightly lower margins in defence. Shares fell 3.1 per cent to USD 346.80 in pre-market trading.