July 25 (Bloomberg) -- Boeing Co.'s quarterly profit and sales exceeded analysts' estimates and the planemaker raised its earnings forecast for the year on record orders. The company's shares climbed the most in three months.

Second-quarter net income at the world's second-largest maker of commercial aircraft was $1.05 billion, or $1.35 a share, compared with a loss of $160 million, or 21 cents, a year earlier, when the company paid a $615 million government fine.

Revenue increased 14 percent to $17 billion and deliveries climbed 18 percent, as Chief Executive Officer James McNerney cut the time it takes to make a 737 jetliner, Boeing's best selling plane. Orders for its new 787 Dreamliner put Boeing closer to regaining the title of biggest commercial-plane maker from Airbus SAS in 2008.

``The ramp-up is well under way, no question about it,'' said Paul Nisbet, an aerospace analyst at JSA Research in Newport, Rhode Island. ``They are capitalizing on that enormous order backlog.'' He has a ``buy'' rating on Boeing's stock.

Chicago-based Boeing, the second-largest defense contractor, said military sales improved with fighter-jet shipments to South Korea. Defense revenue gained 3 percent to $7.98 billion.

Shares of Boeing jumped $3.43, or 3.3 percent, to $107.23 at 4:03 p.m. in New York Stock Exchange composite trading, the biggest rise since April 18. They have climbed 28 percent in the past year.

Profit Forecast

Boeing raised its 2007 profit forecast to $4.80 to $4.95 a share from $4.55 to $4.75. The company projected sales of $65 billion, the high end of its previous range of $64.5 billion to $65 billion. Analysts predicted $4.90 in earnings for the year on sales of $65.2 billion.

The company reiterated its 2008 earnings forecast of $5.55 to $5.75 a share.

``Overall it was a good quarter,'' said Mark Demos, an analyst at Fifth Third Asset Management in Minneapolis, which manages $21.8 billion, including Boeing shares. ``They also took up guidance for the year. That is what people expected. It's now where it should be and the outlook is good.''

The average of 10 analyst estimates compiled by Bloomberg was for second-quarter profit of $1.17 a share. Sales were projected at $16.2 billion.

Purchasing Scandals

In the year-earlier period, Boeing agreed to pay $615 million to resolve criminal and civil charges relating to purchasing scandals. The amount was the largest ever for government-procurement fraud, the U.S. Justice Department said at the time. The payment cost the company $1.15 a share in the quarter.

Deliveries climbed to 114 airliners last quarter. Boeing booked orders for 360 commercial planes, trailing Airbus by 153 aircraft, and began construction on its fuel-efficient 787 Dreamliner. That model has 683 contracts, making it the company's most successful airplane introduction ever with a backlog of about $110 billion.

First flight for the new plane will take place by the end of September, and it remains on schedule for first delivery in May 2008, Boeing said in the statement today. The company had said first flight would happen in late August or early September.

Commercial airplane sales rose 22 percent to $8.7 billion on last quarter's higher deliveries. Profit in the unit increased 34 percent to $960 million. The division now has an order backlog valued at $208 billion.

Defense Profit

Defense-unit profit almost tripled to $854 million from $309 million in the year-earlier quarter, when it had an expense of $496 million, or 41 cents a share, on increased costs at its Airborne Early Warning & Control aircraft program. The division has a backlog of $70.5 billion.

Earnings at airplane parts and systems-makers, including United Technologies Corp., Honeywell International Inc. and General Electric Co., have all been helped by the boom in plane orders, the companies said during discussions of quarterly results this month.

On July 19, Honeywell, the world's largest maker of airplane instruments, said second-quarter profit rose 17 percent on higher sales of commercial-jet parts to Boeing and Airbus.

Boeing's forecast for research and development spending this year was boosted to $3.7 billion from a range of $3.2 billion to $3.4 billion, mostly to keep the Dreamliner on schedule, the company said.

Research Spending

While Boeing still expects research spending to be lower in the second half of this year than in the first, the decline will be less rapid than it previously anticipated to meet commitments on the 787 program, Boeing said.

``Although the increase to R&D will not go unnoticed today, the solid operational performance, raise to guidance and continuing strength in commercial demand should be generally well received by investors,'' Robert Stallard, an analyst at Banc of America Securities LLC, said in a report today.

Airbus's answer to the 787, the A350, will enter service five years after the 787 begins carrying passengers next year. After multiple redesigns, the A350 firmed up 98 orders at the Paris Air Show with customers who had signed preliminary contracts for earlier versions of the plane.

Boeing affirmed its forecast for a 12 percent increase in commercial shipments this year to 445 planes, on two straight years of record orders. Airliner deliveries next year will be between 515 and 520.

To contact the reporters on this story: James Gunsalus in Seattle at jgunsalus@bloomberg.net.

Last Updated: July 25, 2007 16:21 EDT