BOEING REPORTS EARNINGS BOOST.

Byline: Ian Hanigan Staff Writer

With the help of a hefty tax credit and strong commercial airplane sales, the Boeing Co. said Friday that first-quarter earnings tripled over last year, when a strike by white-collar workers hampered jetliner deliveries.

Boeing, which has aerospace operations in Canoga Park, earned $1.24 billion, or $1.45 per share, during the three months that ended March 31. During the same period last year, the world's largest aerospace firm earned $418 million or 48 cents a share.

``We are clearly off to a great start, and off to another great year,'' said Boeing Chairman and CEO Phil Condit in a conference call with reporters and analysts.

Earnings for 2001 included a one-time tax break of $475 million. Boeing said it reached an agreement with the Internal Revenue Service in March to recoup tax expenses associated with McDonnell Douglas Corp.'s research and development from 1986 to 1992. Boeing bought McDonnell Douglas in 1997.

Without the tax break, Boeing would have earned $762 million, or 89 cents a share, in the quarter.

Analysts polled by Thomson Financial/First Call were expecting earnings of 80 cents per share excluding the tax benefit. Following the news, shares of Boeing rose $1.07 to close at $61.70 Friday.

``Boeing's turnaround over the last few years is still very much on track,'' said Matt Collins, an analyst who follows Boeing for Edward Jones, a St. Louis-based consulting firm. ``And I think they're on the right path.''

Overall revenue in the first quarter jumped 34 percent to $13.3 billion, from just under $10 billion in 2000. During the first quarter of last year, the company's commercial airplane unit was slowed by a 40-day strike of engineers and technical workers in Washington state and delivered only 75 commercial planes.

This year, Boeing delivered 122 jetliners - including 72 737s - in the first quarter, bringing revenue of $8.4 billion. The commercial division earned $860 million on a 10.2 percent operating margin.

``Phil Condit promised that (commercial) margins would be above 10 percent for the first time in a long time, and he made it with room to spare,'' said Richard Aboulafia, director of aviation consulting for the Fairfax, Va.-based Teal Group.

On the military side, earnings fell to $246 million in the quarter, compared with $294 million in the first quarter of 2000. Boeing said revenue dropped as a result of fewer C-17, F-15 and F/A-18 deliveries.

``I think they're still forecasting military deliveries to be up for the year slightly,'' said Collins of Edward Jones, ``so I think it's just a timing issue that's going to reverse itself for the rest of the year.''

Boeing's Seal Beach-based space and communications unit reported first-quarter earnings of $84 million on revenues of $2.2 billion. Last year, it earned $60 million on revenues of $1.7 billion. Boeing said the increases primarily reflect the acquisition of Hughes Electronics Corp.'s satellite-manufacturing business, which was bought in October and renamed Boeing Satellite Systems.

The first quarter was one of frenetic activity for Boeing. On March 20, the company announced it will move its headquarters out of Seattle, Boeing's home for 85 years, and relocate to Chicago, Dallas-Fort Worth or Denver this year. Eight days later, the company said it was shelving plans for a larger 747, opting instead to focus on a radically designed, smaller jetliner that will travel at nearly the speed of sound.

Locally, Boeing said in March that it might cut the work force at its Long Beach 717 factory later this year, citing a sluggish market for 100-seat jets. Boeing has since found customers for 22 new 717s, unofficially fattening the order book to 176.

Despite first-quarter losses by most of the major airlines, Boeing CEO Condit said he expects ``continued strength in our operating performance.''

``Our businesses are positioned to deliver value to our shareholders in the short term, in the medium term and in the long term,'' he said. ``We will continue to transform this company into the leading global aerospace enterprise and we've got a world-class team to do it.''

The Associated Press contributed to this report.