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Wed July 24, 2013
Boeing Raises Profit Outlook, Says It Will Keep Cutting Costs
Boeing raised its earnings and revenue forecasts for this year, reflecting strong demand in both the commercial airplane and defense businesses. But company executives say they plan to continue cutting costs.
Boeing has announced a series of layoffs in Washington state this year, and its local headcount has shrunk by more than a thousand since the end of January. CEO Jim McNerney says the company is operating in a “more-for-less world,” and that’s what’s driving the focus on reducing costs.
Morningstar analyst Neal Dihora says Boeing’s customers are a big reason why they’re competing fiercely with each other and want to get cheaper aircraft.
"There’s the war on market share that drives customers to ask for more concessions on price, so while list prices go up every year, the discount may also be going up every year, and the effective price that someone pays for an aircraft is being pressured," Dihora said.
CFO Greg Smith wouldn’t say exactly what Boeing has planned for its Puget Sound workforce. But he said the company will continue to look for ways to increase profits and productivity. Boeing has been expanding operations in South Carolina, a state with cheaper labor costs.