Boeing Takes Off, Raises Guidance (BA, EADSY, LUV, ALK, DAL, UAL, LCC, JBLU, FAA)

For all its struggles with new airplanes, Boeing Co. (NYSE: BA) put up some pretty big numbers for the third quarter. The company’s EPS of $1.46, sharply above the consensus estimate of $1.12. Revenue came in at $17.73 billion, lower than the consensus estimate of $17.83 billion. Boeing delivered 127 commercial aircraft in the third quarter, up sequentially from 118 and year-over-year from 124.

The company’s first new 787 Dreamliner was delivered and the company’s first new 747-8 cargo plane was delivered to Luxembourg’s Cargolux after an initial spat over pricing. Airbus maker European Aeronautic Defense and Space Co. (OTC: EADSY) releases earnings next month. US airlines Southwest Airlines (NYSE: LUV), and Alaska Air (NYSE: ALK), and Delta Air Lines Inc. (NYSE: DAL) released earnings earlier this week and United Continental Holdings Inc. (NYSE: UAL), US Airways Inc. (NYSE: LCC), will release earnings tomorrow. JetBlue Corp. (NASDAQ: JBLU) missed the consensus EPS estimate this morning, though revenues were in-line with expectations.

Boeing raised its full-year EPS guidance from $3.90-4.10 to $4.30-$4.40 and narrowed its revenue estimate to $68-$70 billion. The company lowered delivery estimates on the Dreamliner to 15-20 and to 25-30 for the 747-8 freighter, while raising margin estimates from 8%-8.5% to 9%-9.5%.

The company’s defense group posted an operating profit jump of 20% year-over-year, with its military aircraft group boosting profit by 27%.

The upbeat results and the improved guidance could be hard to meet given the overall outlook for air carriers for the rest of this year. The weak global economy, especially in the developed countries, is already having an impact on capacity. Several of the large foreign carriers have retrieved mothballed aircraft and put them back into service, threatening to reduce traffic even more.

Boeing could be staring into the teeth of a swift and significant downturn in orders if passenger traffic declines further. The company’s backlog reached $332 billion at quarter end, up from $323 billion sequentially. The company said that it has taken a net $61 billion in new orders in the first nine months of the year.

For all the good news in this report, one unusual item that stands out is cash flow. Boeing’s free cash flow for the quarter was just $69 million on operating cash flow of $449 million. A year ago the company’s operational cash flow totaled $1.86 billion and free cash flow totaled $1.6 billion. For the year-to-date, free cash flow is negative, at -$50 million compared with a positive free cash flow of $1.1 billion for the first nine months of 2010. Boeing attributes the decline to continued investment in its development programs and a $500 million payment to its discretionary pension fund.

Boeing’s shares are trading up more than 5% shortly after opening this morning, at $67.11, in a 52-week range of $56.01-$80.65. The lightly traded Guggenheim Airline ETF (NYSE: FAA) closed at $27.89 yesterday and has seen no trades yet this morning.

Paul Ausick