Demand for Boeing's planes has fallen

Boeing said earnings for the three months to 30 September fell to $256m, down from $372m in the same period a year ago.

Profits were hit by a $184m charge that Boeing took to cover costs relating to the ending of production of its 757 plane.

But the results beat analysts' expectations thanks to a 12% rise in revenue at the company's military and space business.

The growth in military income led Boeing to raise its forecast for 2003 group revenue from $49bn to $50bn.

Shares in the company closed up $2.46, or 6.8%, at $38.50.

Turbulence

Boeing has been struggling recently from the global slump in air travel, which has meant cash-strapped airlines are ordering fewer new planes from manufacturers.

The timing of a civil aviation delivery recovery remains uncertain and will likely be no earlier than 2005 Boeing statement

The company is expecting to deliver about 280 planes this year, down from 381 in 2002 and 527 in 2001.

Next year, Boeing expects to deliver between 275 and 290 new planes.

"Although there have been encouraging signs, the downturn remains severe and many airlines continue to incur losses that dampen demand across all airplane types," the company said.

"The timing of a civil aviation delivery recovery remains uncertain and will likely be no earlier than 2005."

Yet, at least some analysts predicted that Boeing would remain strong in civil aviation.

"I still think the future is based on the commercial aircraft," said Victory Capital's Mike Doran.

"Unlike some of the pure defence contractors, Boeing does have this commercial piece that is more cyclical but also gives you more value in the end."

Military strategy

Boeing's overall revenue in the quarter fell to $12.2bn from $12.7bn, but its military and space unit saw revenues climb 12% to $7.3bn.

Boeing said the strong performance at its defence unit would help it to ride out the slump in civil aviation business.

"Strength in defence and non-commercial space markets should continue to partially offset the downturn in the company's commercial aviation and space markets, and drive revenue growth in 2004," the company said.