Despite 787 delays, Boeing ends healthy 2007

Boeing ba on Wednesday reported a robust 2007, but said 2008 revenue will take a $500 million hit because its flagship 787 Dreamliner passenger jet is months behind schedule.

The Chicago-based aerospace giant now forecasts 2008 revenue of between $67 billion and $68 billion because no 787s will be delivered to customers this year. Earlier this month, Boeing postponed the 787's first flight until June and said the first 787s will not be delivered until sometime in early 2009.

The technologically advanced Dreamliner, which has logged a record number of early orders, originally was scheduled to make its first flight last year and deliveries were to begin this year. But delays in deliveries to Boeing of crucial fasteners and problems with the quality of some outsourced work have forced Boeing to twice delay the program.

The twin-aisle 787 will be the first commercial passenger jet with a fuselage made entirely of man-made composite material, and Boeing outsourced a record amount of production work to try to speed the manufacturing of the planes.

Boeing has 857 firm orders for the jet from 56 customers worldwide.

For 2007, Boeing's net income jumped 84% to a record $4.1 billion, or $5.28 a share. That's up from $2.2 billion or $2.85 a share in 2006.

Revenue in 2007 totaled $66.4 billion, up 8%. Passenger jet orders for 2007 hit an all-time record 1,423, up from 1,050 in 2006. For the fourth quarter, Boeing earned $1 billion, or $1.36 a share, up from $989 million or $1.29 a share a year earlier.

"Despite some development program challenges, we are a strong company growing stronger," said CEO James McNerney.

He said Boeing, the USA's top exporter, is well positioned going forward, even if the U.S. slides into recession. McNerney said Boeing is benefiting from strong government defense spending and strong economic growth outside the U.S.

Only 11% of Boeing's order backlog in its commercial airplane unit is from U.S. airlines, for example. Asia and the Pacific and the Middle East are strong markets for Boeing. Last year, Boeing's commercial airplane and defense businesses both saw double-digit profit margins.

Boeing is bracing for the U.S. Air Force's imminent decision on a roughly $40 billion contract for 179 air-to-air refueling tankers to replace its aging tanker fleet.

Both Boeing and European plane-maker Airbus are bidding to supply the aerial tankers, used to refuel military aircraft. Boeing has proposed modified 767-200s, while Airbus is partnering with U.S. defense contractor Northrop Grumman and proposing modified A330s.

The company closed the gap on Airbus in aircraft deliveries last year, but ended the year trailing its European rival for a fifth straight year, 453 to 441, while outpacing it in orders. It scaled back its estimate of 2008 deliveries to 475 to 480, from 480 to 490, to reflect the rescheduling of initial 787 deliveries into 2009.