An increase in federal military spending will help boost this year’s profit at Boeing Co., the nation’s second-largest defense contractor.
A $1.3 trillion bill signed into law in March that funds the government through September 2018 and President Donald Trump’s proposal for the next year, combined with higher profitability from commercial airplanes, helped the Chicago-based company boost its full-year earnings target 3.6 percent to $14.50 a share on Wednesday.
The 2018 bill, which President Trump has praised for its military allocations, “funds key programs” across Boeing’s defense businesses, including missile, space and satellite products, CEO Dennis Muilenburg said on the company’s quarterly earnings call. “We continue to see strong support for our key products in the fiscal year 2019 president’s budget.”
The two-year budget agreement ratified by Congress in March set the cap for defense spending at $700 billion for 2018 and $716 billion for 2019. Boeing warned, however, that uncertainty over federal military spending beyond 2019 could impact the future revenue projections.
Lower budget caps will take effect again in 2020 and beyond, unless Congress acts to repeal or suspend the law, Boeing said in a statement. Future budget cuts or priority changes could result in reductions, cancellations and/or delays of existing contracts or programs.
Boeing posted revenue of $23 billion for the quarter that ended on March 31, a 6 percent increase from a year earlier. The company’s defense group increased sales 13 percent to $5.8 billion, driven by the C-17 military transport plane and international fighter-jet purchases.
