UPDATE 2-Boeing promises cash amid tanker delay; sees Iran deals ahead

(Adds detail on deal Iran)
By Alwyn Scott
NEW YORK, June 2 (Reuters) - Boeing (NYSE:BA) Co BA.N expects to hit
its target of $10 billion in operating cash flow this year and
to return all free cash flow to shareholders, Chief Executive
Officer Dennis Muilenburg said on Thursday.
Muilenburg's remarks came after a delay emerged last week
with the KC-46 aerial refueling tanker program, which raised
worries about additional costs.
The company is not seeing any new technical problems during
flight tests of the tanker for the U.S. Air Force, and has not
slowed production of the first 18 aircraft, Muilenburg said at
an investor conference in New York organized by Sanford C
Bernstein.
He did not comment on whether Boeing's earnings would be
affected by the tanker delay. The company said last week any
potential costs would be accounted for in the second quarter.
But investors are focused on Boeing's ability to generate
cash amid spending to increase jetliner production and develop
three new products: the tanker, the 737 MAX and the 777X. Boeing
also is cutting costs to lift profits on its flagship 787
Dreamliner, which has nearly $30 billion in deferred costs.
Boeing faces tough competition from European rival Airbus
AIR.PA and increasing encroachment from Canada's Bombardier
Inc BBDb.TO , which in April sold up to 125 of its CSeries
aircraft to Delta Air Lines (NYSE:DAL) DAL.N , a deal worth $5.6 billion
at list prices.
"While it's a competitive environment, it's not one where we
have to make bad financial decisions for market share's sake
because of the strength of the backlog that we have," Muilenburg
said when asked if Boeing was cutting prices to win orders.
Boeing has 5,720 jetliner orders in its backlog.
With aircraft sales slowing, Muilenburg said the prospect of
a major order with Iran was moving closer.
After talking with Iranian airlines, he said, "we can see
the market demand is real," and covers narrowbody and widebody
planes. Airbus' announcement of 118 sales is a good indicator of
the potential, Muilenburg added.
"We see market space that's measured in that category," he
said. "You can anticipate that that's potentially a 50-50 kind
of marketplace for Boeing and Airbus and we're going to battle
it out competitively."