Boeing Co., the second-largest U.S. defense contractor, reported on Wednesday its first loss of 160 million U.S. dollars in the second quarter.

The loss, the first in three years, was due to costs to settle a Pentagon purchasing scandal and pay penalties for delays in a military program, the company said in a statement.

As Chief Executive Officer James McNerney cut its 2006 earnings projection to as little as 2.40 U.S. dollars a share to reflect the costs of the settlement and the military aircraft delays, Boeing shares fell 3.45 dollars to 80.30 dollars at 11:10 a.m. in New York Stock Exchange composite trading. They earlier fell to 79. 60 dollars, a 5 percent drop that marked the biggest slide since November 2002. They gained 5.1 percent last quarter.

The second-quarter net loss totaled 160 million U.S. dollars, or 21 cents a share, after net income of 566 million dollars, or 70 cents, a year earlier, according to the statement.

Boeing agreed to pay 615 million dollars to settle Justice Department ethics charges. The company also said late deliveries of aircraft to Australia and Turkey cut earnings by 496 million dollars.

Boeing remained shadowed by ongoing investigations and lawsuits over its contracting in relation to the hiring of former Air Force official Darleen Druyun and the alleged use of secret documents obtained from rival Lockheed Martin Corp. to win contracts.

Despite its mishaps, Boeing, however, boosted its 2007 earnings forecast by 15 cents, to 4.25 to 4.45 dollars a share, citing the strength of the commercial airplane business, a modestly growing defense business and increased productivity companywide.

Sales will be as much as 60.5 billion dollars this year and as much as 65.5 billion dollars in 2007, helped by demand for commercial planes and productivity improvements, according to Boeing forecasts.

Source: Xinhua