Boeing 1Q16 Earnings Call Notes

The Boeing (BA) Dennis A. Muilenburg on Q1 2016 Results

Continue to see a healthy commercial airplane marketplace

” We continue to see a generally healthy commercial airplane marketplace, driven by improving airline profitability, strong passenger traffic growth, and meaningful replacement demand. According to the International Air Transport Association [IATA], passenger traffic is off to its strongest start in eight years, with traffic growing 8% in early 2016. Over the past three years, we have seen passenger traffic growth consistently outpace global GDP and airline capacity growth, a key indicator that the supply and demand dynamic remains positive”

Global air cargo down though

“In contrast to the strength of passenger traffic, the global air cargo market is off to a slow start this year, with air freight traffic declining 2% over the first two months. However, we continue to expect approximately 3% growth for the full year. As always, we continue to keep a watchful eye on global market conditions for both passenger travel and cargo to ensure that supply and demand are balanced.”

Oil prices haven’t changed customers views on future fleet

“With regard to oil prices, while we have seen a rebound from the February lows, prices are still well below the 15-year average. With that said, our customers are telling us that current oil prices have not substantially changed their views on future fleet planning or their commitment to existing delivery schedules.”

Airplane order activity is continuing at a moderated but healthy pace

“Airplane order activity is continuing at a moderated but healthy pace. Meanwhile, requests to change deliveries remain well below the historical average. As a matter of fact, in the past year, deferrals, accelerations, debookings, and cancellations combined for about 1% of our backlog. That is well below the 6% average over the last 15 years.”

Expecting headcount to be down this year as drive productivity

“I will say the overall macro trend that we have for this year is that we expect employment will be net down moderately. I can’t give you a specific number there, but we are on a moderate downward trend enterprise-wide this year as we drive productivity. As I said earlier, we’re also doing that and trying to be very mindful of our employees. And as you know, I have a great deal of respect for our people. They are world-class. They’re the best in the world at what they do. And where we can leverage attrition and the voluntary layoff programs that we’ve put in place, we will, and so far that approach has been very effective for us. And I think that’s good for the business and good for our people, ultimately good for our customers. So that’s our headset on that approach.”