April 23 (Bloomberg) -- Boeing Co. profit rose 38 percent in the first quarter, beating analysts' estimates, as the world's No. 2 commercial planemaker boosted deliveries and orders. Shares climbed on the growth outlook for next year.

Profit from continuing operations rose to $1.21 billion, or $1.61 a share, from $873 million, or $1.12, a year earlier, the Chicago-based company said today in a statement. Sales gained 4.1 percent to $16 billion. The results beat the $1.35 a share average estimate of 20 analysts in a Bloomberg survey.

An 8.9 percent slump in the dollar this year has given Boeing an advantage over larger European rival Airbus SAS, whose costs are mostly in euros while jet sales are in the U.S. currency. Boeing is also getting a lift as carriers including Continental Airlines Inc. buy more 737s to replace older, less fuel-efficient planes to reduce the effect of record oil prices. Unfilled commercial orders rose to an unprecedented $271 billion.

``Boeing is better positioned against Airbus'' in part because of next year's scheduled arrival of the 787 Dreamliner, Eric Marshall, research director at Dallas-based Hodges Capital Management, said in a telephone interview. Hodges is adding to its 330,000 shares. ``The weak dollar combined with really having a superior product from a fuel standpoint should allow Boeing to gain market share over the next five years.''

Profit for 2009 will be $6.80 to $7 a share on sales of as much as $73 billion, Boeing said in its first forecast for next year. Analysts had predicted profit would rise to $6.87 a share from about $5.93 this year, even after a dozen estimates were cut since this month's announcement of a third 787 Dreamliner delay.

Shares Surge

The results encouraged investors, who had pushed the stock down 15 percent in the quarter on Dreamliner delays and the surprise loss of a $35 billion defense competition to a team including Airbus. Boeing climbed $3.53, or 4.5 percent, to $82.09 at 4 p.m. in New York Stock Exchange composite trading.

Jetliner deliveries rose 8.5 percent last quarter, with almost two-thirds going overseas. Only 11 percent of the order backlog is from U.S. airlines, Chief Executive Officer James McNerney said on a conference call.

McNerney had held back his annual forecast until today to learn more about the effects of delays on the 787, which is at least 14 months late and won't enter service until next year's third quarter. Boeing is counting on the aircraft, whose light carbon fibers improve fuel efficiency, to help regain the No. 1 planemaker post from Toulouse, France-based Airbus, which has also struggled with delays for its new A380 superjumbo jet due to faulty wiring.

`Impressive' Outlook

The forecast is ``fairly impressive,'' Cai von Rumohr, an analyst at Cowen & Co. in Boston who rates the shares as ``outperform,'' told Bloomberg Radio. ``Their style has been, because of the uncertainty of the 787, to start off with conservative guidance, so if they're putting a number like that out at this point, given that they could have picked a lower number, my guess is they feel relatively good.''

One reason earnings beat analyst expectations is that expenses including research and development were lower than anticipated, he added.

Commercial sales rose 8 percent to $8.16 billion, generating a 39 percent jump in operating earnings, while Boeing's military business saw sales fall 1.8 percent to $7.58 billion even as profit increased 10 percent. Boeing is also the second-largest U.S. defense contractor, trailing Lockheed Martin Corp.

Jetliner Orders

Boeing said today it expects to deliver 500 to 505 airliners in 2009, up from as many as 480 this year, and that the figure will grow again in 2010. Boeing reiterated its Jan. 30 forecast for 2008 earnings of $5.70 to $5.85 a share on sales of $67 billion to $68 billion. A reduction in research-and-development spending will help next year's profit, Boeing said.

The company delivered 115 commercial planes in the quarter and booked 289 orders, including 75 Dreamliners. About 63 percent of the planes built went to overseas carriers such as Singapore Airways Ltd. and Dublin-based Ryanair Holdings Plc, which got 13 of the 737 model, the world's most widely flown commercial plane.

U.S. airlines are ordering 737s to replace their aging domestic fleets as fuel prices have surged 70 percent in the past year. Continental received 10 737s and Southwest Airlines Co. received 12 in the quarter, according to Boeing's Web site.

The airline industry's ``more tenuous'' condition because of the weakening economy isn't affecting Boeing's sales because higher oil prices are driving orders for new planes that use less fuel, McNerney said on a conference call.

Dreamliner Delays

A decline in Boeing shares following the first 787 delay in October deepened after the company announced another postponement in January and then unexpectedly lost a $35 billion U.S. Air Force tanker aircraft competition on Feb. 29. The share price declined 19 percent from Oct. 9 through today.

Boeing is talking with customers about ``appropriate mitigation'' for the delays, Chief Financial Officer James Bell said on the call today. ``There'll be significant profitability in the program to cover'' any penalties.

The tanker award was won by Northrop Grumman Corp. and Airbus on Feb. 29, prompting an official protest by Boeing, which had been the sole supplier since the 1950s. The U.S. Government Accountability Office will rule on whether the contest was fair and legal by mid-June.

Growth prospects for the defense unit ``remain solid, regardless of the tanker outcome,'' McNerney said today.

The division, in a joint venture with Textron Inc., won a Pentagon contract in the quarter for as many as 35 V-22 Osprey tilt-rotor aircraft each year through 2013. The Osprey order helped push Boeing's total backlog to a record $346 billion.

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

Last Updated: April 23, 2008 16:37 EDT