Boeing reported higher-than-expected earnings for the second quarter despite lower revenue, and it raised its forecast for full-year profit, sending both the aircraft maker's stock and the Dow higher.
The company is benefiting as profitable airlines continue to order new planes. With a backlog of orders approaching a half trillion dollars, Boeing said that it will buy back US$10 billion of its own stock this year, making the remaining shares more valuable, and reduce its taxes by paying down its pension liability.
In midday trading, the shares were up $17.69, or 8.3 per cent, to $230.15. That would be the biggest one-day gain in percentage terms since 2009.
The Boeing bump helped lift the Dow Jones industrial average about 88 points to above 21,700.
Boeing said its backlog grew to US$482b at the end of June, including US$27b in new net orders during the second quarter. Nearly 90 per cent of that value is from the backlog of more than 5,700 commercial airliners, with Boeing's defense business accounting for the rest.
The Chicago company and European rival Airbus figure to benefit for years to come from growing demand for travel and the planes that will be needed to carry passengers around the world, although manufacturers in China, Japan and Russia aim to become bigger players too.
Boeing is gearing up to increase production of its most popular airliner, the single-aisle 737 that is a mainstay on short and medium-haul routes. Demand for so-called widebody, two-aisle planes that are used on many international routes is not as strong.
Responding to questions from analysts and reporters, Boeing Chairman and CEO Dennis Muilenburg said the company is on track to begin delivering planes to Iran next year.
And Muilenburg said Boeing is talking to airlines about design ideas for a new, so-called midmarket plane - bigger than a 737 but smaller than a 777 widebody. He said Boeing envisions a plane that would seat 220 to 270 passengers and have a range of 4,000 to 5,000 nautical miles.
Boeing said it earned US$1.76b in the second quarter, reversing a loss in the same quarter last year.
Adjusted earnings were $2.55 per share, easily topping a consensus forecast of $2.32 per share among industry analysts surveyed by Zacks Investment Research.
Revenue fell 8 per cent to US$22.74b - below Wall Street projections - as the company delivered 183 airliners in the quarter, down from 199 a year earlier.
Boeing Co. expects full-year adjusted earnings to range between $9.80 and $10 per share, up 60 cents per share from the last forecast and well above analysts' prediction of $9.39 per share, according to FactSet.
That largely reflects Boeing's expectation of lowering its taxes by about US$700 million by speeding up funding of pension obligations. Boeing said it will use stock to make a US$3.5b pension contribution in the third quarter, meeting funding requirements through 2021.
Boeing also said it plans to use cash to buy back US$10b in company stock this year, up from a previous goal of US$6.5b.