Boeing [BA] yesterday reported strong second quarter financial results driven by sales growth at its Commercial Airplanes segment and margin improvements at the commercial and defense segments.

“Strong operational performance drove double-digit margins at both of our major businesses and produced outstanding results in the quarter,” Jim McNerney, Boeing’s chairman, president and CEO, said in a statement.

Net income jumped 20 percent to $941 million, $1.25 earnings per share (EPS), from $787 million ($1.06 EPS), as overall margins rose nearly a percent to 9.3 percent. Per share earnings blew out consensus estimates of 97 cents EPS. The higher sales coupled with improved operating performance more than offset a sharp increase in pension expense.

Sales increased 6 percent to $16.5 billion from $15.6 billion a year ago.

Sales at Commercial Airplanes gained 19 percent to $8.8 billion on a slight increase in aircraft deliveries, product mix, and strength in the services business, James Bell, Boeing’s chief financial officer, said on the company’s earnings call. Operating earnings increased 35 percent to $920 million on the higher sales and improved performance, he said.

Barring unforeseen issues, Boeing’s two key commercial development aircraft programs, the 787 passenger plane and 747-8 freighter, are mostly done flight-testing and are entering the final phases of certification with initial deliveries slated for the third quarter, McNerney said.

The global economy continues on its path of sustained recovery despite uncertainties and fundamentals remain sound in airline passenger and freight traffic, which in turn is driving demand for new aircraft, McNerney said.

At Defense, Space & Security, sales fell 4 percent to $7.7 billion while operating earnings climbed 12 percent to $798 million. Sales declined on lower volume in the Army’s Brigade Combat Team Modernization program and the Department of Homeland Security’s Secure Border Initiative network.

Defense margins increased 150 basis points to 10.4 percent to drive the strong earnings. The improvements stemmed from operating performance, the lack of a charge in the quarter versus a year ago when Boeing took a $46 million provision on an Airborne Early Warning and Control aircraft program, and $40 million associated with both a contract adjustment at United Launch Alliance with Lockheed Martin [LMT] and the gain from a sale of property, Bell said.

Responding to a question about cost overruns on Boeing’s engineering and manufacturing development contract for the Air Force’s KC-46A aerial refueling tanker, Bell said the company expects to either break even on the contract or make a small margin and then be profitable on the production portion. The Air Force plans to buy 179 of the tankers. Bell earlier in the earnings call said that the tanker contract is “not in a forward loss provision.”

McNerney, like his counterparts at other large defense firms, said the defense environment will be challenging going forward.

For the year, Boeing raised its EPS guidance a dime to between $3.90 and $4.10 on strong performance so far and fewer than projected deliveries of development aircraft. The sales outlook remain at between $68 billion and $71 billion despite slightly fewer planned commercial aircraft deliveries and about $500 million less in defense sales at the high end of previous guidance. Bell said that Boeing’s commercial aviation services business will be picking up some of the sales slack.

In the quarter, free cash flow was $1.3 billion and total backlog stood at $323.6 billion, up from $320.9 billion at the end of 2010. Commercial backlog was $259.9 billion at the end of the quarter, up $4.3 billion so far this year, while defense backlog was $48.1 billion, down $300 million during 2011.