Boeing sets $3 billion stock buyback

Aircraft maker to buy up to 5% of its stock, which has fallen since hitting a record high in May.
NEW YORK (Reuters) -- Boeing Co., whose stock has fallen 16 percent since May, has approved a plan to buy back up to $3 billion of its own shares, equal to about 5 percent of its publicly traded stock.
The move, announced after the market close Monday, comes amid a general downturn in aerospace and defense stocks, which have fallen sharply in recent months after a three year run-up during the Iraq war and a boom in plane orders.
The Chicago-based plane maker, which is also the Pentagon's No. 2 supplier, said the repurchased shares would be used for general corporate purposes, including stock options.
Boeing (Charts) stock rose about 0.6 percent in after-hours trading on the news.
"We are enhancing shareholder value with a balanced use of our cash flow," said Boeing CEO Jim McNerney. "Our record backlog, strong operating performance and solid balance sheet allow us to invest in growth programs like the 787 Dreamliner while also pursuing a significant share-repurchase program."
Boeing has been performing well financially for the past year or so, despite recording a second-quarter loss last month after some large one-time charges.
In 2005 Boeing reported $2.6 billion in profit as it booked a record 1,002 net commercial plane orders and its defense unit reported its highest ever revenue on the back of strong U.S. defense spending.
But this year analysts are predicting a slowing of growth in the U.S. defense budget and saying the commercial airplane boom has already hit its peak. Boeing's shares hit an all-time high of $89.58 on May 10, but since then have fallen more than 16 percent.
The shares closed up about 1 percent in Frankfurt trading early Tuesday after the after-hour announcement Monday.
Boeing added that it had terminated its existing share buyback plan, which it said was largely complete. That plan, launched in 2005, authorized the repurchase of 40 million shares. The company said it has spent about $5 billion buying back its stock since 2004.