it would take a charge of $1 billion for
the 747-8 program due to increased
production costs and “difficult market conditions.”
Boeing said $360 million related
to its decision to maintain the 747-8
production rate at 1. 5 airplanes per
month nearly two years longer than
previously planned, deferring an increase to 2 per month.
Higher allocation of fixed expenses
and volume-based penalties to suppliers were cited as main drivers of the
additional costs.
Boeing has 78 orders for the new
freighter from cargo operators including Cargolux, Nippon Cargo Airlines, AirBridgeCargo Airlines, Atlas
Air, Cathay Pacific, Dubai Aerospace
Enterprise, Emirates SkyCargo,
Guggenheim and Korean Air.
In other comments tied to the
latest quarter results, McNerney acknowledged the company can make
strides on program execution. “We
know that we can and must do better on our development programs,”
he said.
McNerney also noted that Boeing
expects to announce the location of a
second assembly line for the 787 program in “the next couple of weeks.”
The choices are Charleston, S.C.,
where the company is buying a plant,
and Everett, Wash. “We are sorting through that right now, and you
should expect a decision over the
next couple of weeks.”
The results come as Boeing faces
declining orders amid a global
recession that has slammed cargo
demand. ACW
UPS reported earnings of $549 million for the third quarter, a drop of 43 percent from
last year, amid a hazy outlook for the
holiday season thanks to differing
customer views.
The Atlanta-based shipping giant
also reported third-quarter revenue
of $11.2 billion, down 15 percent
from one year ago.
UPS Chairman and CEO Scott
Davis said he was “encouraged by
the signs of economic recovery that
are becoming apparent.” But, he
cautioned, “we still have a long way
to go.”
Davis added, “Ongoing strategic investment has positioned UPS to capitalize on growth opportunities around
the world. We are managing operations well, while controlling costs and
maintaining excellent service.”
UPS Profit Drops Amid Hazy Holiday Outlook
In a statement
on its results,
UPS said freight
revenue dipped
to $1.9 billion from
$2.3 billion. Average
daily volume dropped
from 12. 9 million
packages to
12. 3 million
packages.
International
package
revenue
for the
quarter
was $2.4
billion compared to $3 billion for the
same period last year. Average daily
volume for international packages
rose slightly to 2 million packages
from 1. 9 million.
Next Day Air volume increased
2. 4 percent but was more than offset
by a 6. 2 percent decline in ground
shipping. U.S. domestic package
revenue fell to $6.9 billion from $7.8
billion one year ago due in part to
lower fuel surcharges, the company
said.
Top UPS officials said the company is ready for the busy holiday
season although the effects of the
continuing global recession remain
to be seen.
“Our customers have widely dif-
fering views on their outlook for the
holiday season,” UPS Chief Finan-
cial Officer Kurt Kuehn said in a
statement on the results.
“Nevertheless, UPS is primed to
handle the seasonal package surge as
it materializes,” he said. ACW
