Oct. 21 (Bloomberg) -- Boeing Co. posted a third-quarter loss that was bigger than analysts estimated and reduced its full-year profit forecast, hurt by $3.5 billion in charges for the delayed 787 Dreamliner and 747-8 jumbo jet programs.

The net loss of $1.56 billion, or $2.23 a share, compared with year-earlier net income of $695 million, or 96 cents, the Chicago-based company said today. The average estimate was $2.10 in a survey of 18 analysts.

The loss was the biggest in Bloomberg records dating to mid-1983. Boeing took combined charges of $3.59 a share for the 787 Dreamliner, whose first three test planes have no commercial value because of extensive reworking, and for the 747-8, which the company earlier this month said is more expensive and encountering lower demand than it predicted.

“We’re walking a fine line at this point, and any other delays with either program could seriously affect the outlook from 2011 on,” said Michel Merluzeau, a consultant with G2 Solutions in Seattle.

Sales rose 9.1 percent to $16.7 billion from the year- earlier quarter, which was hurt by a strike. That was less than the $17.2 billion average estimate in the Bloomberg survey.

Boeing, which trails only Airbus SAS in commercial-plane deliveries, fell $1.26, or 2.4 percent, to $50.63 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have risen 19 percent this year and dropped 50 percent since October 2007, when the first of five 787 delays became known.

Full-Year Forecast

Full-year profit may be $1.35 to $1.55 a share on sales of $68 billion to $69 billion, Boeing said today. The previous forecast, made in July before the charges were disclosed, was $4.70 to $5 a share. The company won’t give a 2010 target until January. Analysts had estimated 2009 profit of $1.67 a share and 2010 earnings of $4.42.

Penalties to customers and suppliers are mounting because of setbacks for the jets, neither of which has flown yet. Boeing reiterated today that the 787 will fly this year and be delivered to the first customer at the end of 2010.

“With no status change on the 787, there’s just not much to drive the stock today,” said Matt Collins, an analyst with Edward Jones in Des Peres, Missouri. “Everybody is just holding their breath on the 787.”

Boeing had $6.6 billion in cash and marketable securities as of Sept. 30 compared with $5 billion at the end of June. Consolidated debt climbed to $11 billion from $9.1 billion. The company spent $580 million in cash and forgave $422 million in advance payments to buy Vought Aircraft Industries’ Dreamliner operations in South Carolina in July.

787 Cash Flow

“We are concerned about cash flow levels for the 787 and the potential for substantial rework on airplanes in production, should the test flight and certification process uncover necessary changes,” Douglas Harned, a Sanford C. Bernstein & Co. analyst in New York, wrote in a note today.

The company sold $1.95 billion in bonds in July to ensure adequate liquidity to fund operations and is evaluating issuing additional debt to help meet cash requirements driven by debt maturities, Chief Financial Officer James Bell said on a conference call.

Program Charges

The 787 charge was $2.46 a share, higher than the $2.21 announced in August because of a change to the applicable tax rate, said Todd Blecher, a spokesman for the company. Earnings were also hurt by spending on the program of 14 cents a share in August and September.

“The financial profile continues to weaken due to program cost over-runs and delays,” said Joel Levington, director of corporate credit at Brookfield Investment Management Inc. “With 2009 guidance well below Street expectations, and debt usage continuing to rise, we would not be surprised to see Boeing’s credit ratings come under further pressure in the coming quarters.”

The commercial-airplane unit’s loss was $2.84 billion on sales of $7.88 billion, compared with year-earlier profit of $394 million.

The backlog fell to $254 billion from $257 billion as of June 30 as orders lagged behind deliveries and cancellations. Boeing reported 170 orders and 91 cancellations through September, leaving a net order book for the year so far of 79 planes, compared with 123 for Toulouse, France-based Airbus.

Boeing lost its top spot to Airbus in 2003 and was running one jet ahead of its rival in shipments through September. Deliveries, which trigger the bulk of payments, will rise this year to 480 to 485 aircraft, Boeing repeated today. Airbus has said it expects to ship about the same number.

2010 Deliveries

Delivery slots are sold out for 2010, and the level of deferral requests isn’t getting worse, Chief Executive Officer Jim McNerney said on today’s call. He and a spokesman declined to comment on the trend for cancellations.

The U.S. company this year has increased deliveries even as airlines canceled and deferred orders because of the recession. Shipments rose 35 percent to 113 compared with last year’s third quarter, which was hurt by a two-month strike that started in September 2008 and by delays related to work on airplane galleys. The disruptions shaved 60 cents a share from earnings in the year-earlier quarter.

Boeing now only expects to provide $800 million in direct funding to customers, less than the $1 billion it had been predicting, as “financing markets are actually getting more robust,” McNerney said.

Boeing plans to scale back twin-aisle production next June, cutting 777 output by 29 percent to five planes a month and postponing planned increases in the 747 and 767 programs. No changes are planned to the 737 manufacturing rate, McNerney repeated today.

Defense Business

Boeing’s military business, the second-largest U.S. defense contractor, posted a 2.9 percent sales gain to $8.74 billion and a 3.6 percent increase in profit to $885 million.

The unit has a “weaker outlook” than competitors because the company is on the wrong set of programs as the Pentagon curbs spending, analyst Harned wrote in a note today.

The Defense Department has canceled parts of Boeing programs and scaled back others. Northrop Grumman Corp. beat Boeing on Oct. 1 for a $3.8 billion contract to maintain the U.S. Air Force’s KC-10 aerial refueling tanker fleet, and the two are still competing for a $35 billion order for the next generation of KC-135 tankers.

Northrop, the third-largest U.S. defense contractor, today said quarterly profit fell 4.3 percent to $490 million, or $1.53 a share, because of higher pension costs. The company raised its 2009 forecast.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net.

Last Updated: October 21, 2009 16:49 EDT