Boeing, the planemaker behind one of the world’s most widely used single-aisle jets as well as the aircraft flown by U.S. presidents, received a $1.1 billion windfall from tax cuts approved late last year.
The gain was primarily due to a reduction in tax liabilities from previous years, which will be lower under the new top corporate rate of 21 percent than under the previous levy of 35 percent, the Chicago-based company said Wednesday. That helped boost net income 92 percent to $3.13 billion in the three months through December, building on delivery of a record 209 commercial jetliners, including the revamped and more fuel-efficient single-aisle 737.
The tax cuts will enable Boeing to spend $300 million in targeted areas including staff training and “workplace of the future” upgrades, CEO Dennis Muilenburg told reporters, with more investments to come. The planemaker, which builds aircraft in Seattle as well as North Charleston, S.C., joins corporations from JPMorgan Chase to Pfizer and Apple that have announced spending plans for some of the extra cash available after the landmark tax overhaul.
Their actions indicate the bill is likely to deliver at least some of the economic growth for which President Trump and Congressional Republicans were hoping from the package, which also creates a territorial system that will eventually allow U.S. companies to bring home cash earned overseas without a penalty.
Pfizer, the nearly 200-year-old drugmaker, plans to invest $5 billion in capital projects that include strengthening its U.S. manufacturing operations, while JPMorgan is putting $20 billion toward boosting loans for affordable homes and small businesses, expanding its branch network and raising wages for hourly employees.
“We’ve really taken a hard look at this and looked at what’s the best use of capital to win in the marketplace and meet the overall objectives that will drive the profitability that will allow us to continue to invest in the business,” said Greg Smith, Boeing’s chief financial officer.
Boeing remains committed to returning money to its shareholders too, Muilenberg noted, have promised to deliver 100 percent of its free cash flow. In the fourth quarter, the planemaker bought back 6.7 million of its shares for $1.7 billion while paying $800 million in dividends.
In December, the board increased the quarterly payout by 20 percent to $1.71 a share and approved $18 billion in stock repurchases over roughly two years.
