By Jon Ostrower And Doug Cameron
Recent moves by two U.S. airlines to defer new aircraft buys and
continue flying older planes haven't altered the fundamentals
driving the commercial aircraft business, Boeing Co. Chief
Executive Jim McNerney said Tuesday.
The sharp drop in jet fuel prices has unnerved some investors
about the ability of Boeing and rival Airbus Group NV to sustain
higher production rates, and though the oil benchmark has climbed
in recent days, fleet planning changes by the parents of American
Airlines and United Airlines added to the concerns.
"Nothing about our fundamental view of the market has changed,"
Mr. McNerney said in his opening remarks at Boeing's annual
investor day in Chicago.
He said requests for cancellations and deferrals remained at
historic lows, and pricing was steady as it targeted securing as
many new orders for jets this year as it delivers, known as the
book-to-build ratio.
Boosting jet production and lowering costs are central to
Boeing's effort to boost profits and shareholder returns, and
buybacks remain a key priority for the company, which repurchased
$2.5 billion in stock during the first quarter.
Analysts have noted that moves by American Airlines Group Inc.
and United Continental Holdings Inc. were likely planned long
before the slide in oil prices started last summer, and included
juggling orders made by previous management teams.
While Boeing's free cash flow was negative in the quarter, Mr.
McNerney said cash generation was typically light at the start of
the year and reiterated existing guidance.
Boeing has expanded the cost-cutting push by its commercial jet
arm-- known as Partnering for Success--to 500 suppliers from 150
and boosted the target for trimming expenses at its defense
arm.
The shares were recently down 0.6% at $144.02, narrowing earlier
losses and in line with the early decline in the broader
market.
Write to Jon Ostrower at jon.ostrower@wsj.com and Doug Cameron
at doug.cameron@wsj.com
Access Investor Kit for The Boeing Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0970231058
Access Investor Kit for United Continental Holdings, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9100471096
Subscribe to WSJ: http://online.wsj.com?mod=djnwires