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Future outlook for Boeing

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Boeing’s fiscal 2014 guidance

Boeing (BA) has lifted its EPS (or earnings per share) guidance for 2014 by $0.20 from $8.10 to $8.30. The company’s strong performance for three consecutive quarters backs this decision. BA also raised its operating cash flow guidance for 2014 to more than $7 billion based on robust performance combined with the impact of timing receipts and expenditures. The company’s strong backlog in both its segments further strengthens its future prospects.

Between now and 2017, Boeing plans to ramp up its production of commercial airplanes like the 737 from the current rate of 42 per month to 47 per month. Then, the company intends to increase production again to 52 per month in 2018, given its backlog of more than 4,000 orders.

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Future outlook for Boeing

The gradual economic recovery and consolidation within the industry have enabled airlines to place big orders for new airplanes. This along with the expected rise in passenger air traffic in the Asia-Pacific region creates ample opportunities for Boeing to expand in the coming years.

Boeing forecasts a global demand for nearly 37,000 new commercial airplanes in the next 20 years as a result of growth and replacement needs. The company is banking on its 777 and 777x in the twin-aisle segment and the 737 MAX in the single-aisle segment to drive growth in the coming years.

BA sees solid support for its major programs in the fiscal 2015 budget process. International business represented 28% of Defense, Space & Security (or BDS) revenues during the quarter and formed 37% of the BDS backlog as the company continued to leverage its unique One Boeing global advantage.

To enhance its competitiveness, Boeing has decided to consolidate its defense business further to offset the decline in the US military budget. The company is working on integrating supply chains so that low-volume defense and space buys can be bundled with high-volume commercial orders. Boeing also aims to reduce the segment’s operating costs by another $2 billion to ensure competitiveness through the ongoing downturn in domestic defense spending.

Along with Boeing, Lockheed Martin is part of the MSCI Industrials Index ETF (FIDU). Other companies in the ETF include Caterpillar (CAT), Union Pacific Corp. (UNP), and The 3M Company (MMM).

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