Boeing Has a Pretty Big Cash Plan for Investors
Boeing Co. (NYSE:BA) is making moves this week. Not only did it finally put its grounded Dreamliner 787 in the air Monday, but it also announced Wednesday that it plans to return about 80 percent of its free cash flow to shareholders through dividends and share buybacks.
Is Chief Executive Jim McNerney jet-lagged, or does he know what he’s doing? Speaking at an investor conference, he justified the company’s decisions, explaining that it can be aggressive “because we have better planes” than rival, Airbus.
As soon as the 787 left its competition in the dust and took flight Monday, Boeing started planning to ramp up 787 and 737 production, which currently stands at target rates of 10 and 42 per month, respectively. Lower research and development costs at its commercial airplane units have been the reasons cited for Boeing’s decision to return much of its free cash flow to shareholders.
Boeing Chief Financial Officer Greg Smith is also on board, explaining that the company’s cash deployment move won’t reduce its cash balance of about $11 billion, as it is forecasted to raise more than $8 billion in operating flow this year. Reuters reports that the company raised its dividend 10 percent to 48.5 cents per share quarterly in December, and announced it would spend up to $1.5 to 2 billion in 2013 on share buybacks.
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