Boeing Predicts Q4 Losses from Strikes, Cuts, Overruns

Boeing has announced a projected fourth-quarter loss of US$5.46 per share, citing a range of challenges, including labor strikes, job cuts, and cost overruns on government programs. These setbacks highlight broader difficulties in the company’s commercial and defense segments.

Preliminary results indicate fourth-quarter revenue of US$15.2 billion, falling short of analysts' expectations of US$16.6 billion. Boeing attributes its losses to a machinists' strike that disrupted production for over seven weeks. The strike affected the assembly of its 737 Max, 777, and 767 aircraft at facilities in Washington state. The work stoppage ended with a new four-year agreement with the International Association of Machinists (IAM), which includes a 38% pay increase over four years, a $12,000 lump-sum bonus, and improved 401(k) benefits.

The company also took a US$1.1 billion pre-tax charge related to its 777 and 767 programs. Meanwhile, the defense, space, and security segment recorded an additional US$1.7 billion in pre-tax charges tied to the KC-46A tanker, T-7A trainer, and Commercial Crew programs. These charges stem from manufacturing cost increases and labor disruptions.

“Although we face near-term challenges, we took important steps to stabilize our business during the quarter, including reaching an agreement with our IAM-represented teammates and conducting a successful capital raise to improve our balance sheet,” said Kelly Ortberg, CEO, Boeing. He also noted the resumption of production for the 737, 767, and 777/777X models.

In addition to labor-related issues, Boeing reduced its workforce by 10%, laying off hundreds of employees in Washington and California. The company has also been exploring asset sales to alleviate its US$58 billion debt burden. According to reports, Boeing is considering divesting its Jeppesen navigation unit, which could raise between US$6 billion and US$8 billion.

Despite setbacks, Boeing successfully raised US$19 billion through a share sale during the fourth quarter to bolster its cash reserves, ending the year with US$26.3 billion in cash and marketable securities.

Boeing is set to release its full fourth-quarter and annual financial results on Jan. 28, 2025.