The Boeing Company (BA - Free Analyst Report), the giant aerospace/defense company (and a component of the 30-stock Dow Jones Industrial Average) had a decent second quarter. Sales of $15.6 billion were down 9% from the 2009 period, and earnings were 25% lower. However, profits were up on a consecutive-quarter basis, and came in and a bit ahead of our estimates.

In the defense area, sales were off 8%, largely reflecting the impact of labor disruptions, which included a work stoppage at the C-17 facility, and probable productivity reductions at another plant where a labor stoppage was averted. And profitability in this segment was narrowed by a combination of the labor problems and a charge on the AWACS program. Backlog for this group was $60.6 billion at June 30th, about twice the likely sales in 2010.

In the commercial area, deliveries totaled 114 versus 125 in the year-earlier period, reflecting some deferments by airlines, and profitability narrowed as the company spent heavily on R&D to develop the new 787 Dreamliner and the 747-8. Boeing predicts total airliner shipments of between 460 and 465 in 2010, vs. 481 in 2009.

During the second quarter, the company increased its production rate twice for its popular 737, expecting to deliver 35 a month beginning in early 2012. At June 30th, there were 3,304 jetliners in the backlog, valued at $252 billion. And that was before the favorable impact of orders announced at the late-July Farnborough Show in the United Kingdom. Meanwhile, the 787, still in development, had accumulated 863 orders by the end of the June quarter. It should begin shipments in late 2010 or early 2011.

Subscribers should be aware that our estimates and projections exclude any benefit from the competition to manufacture a replacement for the KC-135 tanker aircraft. There are hundreds of these ancient aircraft still being used by the United States Air Force, with an average age near 50. They must be replaced. Boeing is competing for the first of three program segments, against Airbus Industrie (the European Consortium), with the award slated for November. The value of the first order is likely to be about $35 billion. Our share-earnings estimates for 2010 and 2011 remain unchanged at $3.80 and $4.85, respectively.

* This report includes late-breaking news not reflected in our full-page review of this company.