Boeing Faces $3.5 Billion Loss in Q4 Amid Labor Strikes and Layoffs
Boeing has revealed significant financial setbacks for the fourth quarter of 2024, forecasting a staggering $3.5 billion loss in operating cash flow. The company attributes this drop primarily to labor strikes, workforce reductions, and adjustments within its defense division. While Boeing anticipated a total revenue of $15.2 billion for the quarter, this figure falls short of the $16.76 billion analysts had expected. The company's GAAP loss per share is expected to hit $5.46, much steeper than the $1.32 loss initially predicted by the market.
A major factor contributing to this financial downturn was the strike led by the International Association of Machinists (IAM), which affected the company’s production lines. This disruption culminated in a new four-year labor agreement that involved a significant 38% wage increase for IAM members over four years. Additionally, the company introduced changes to health benefits and a $12,000 combined bonus for workers. Although this agreement resolved the strike, it caused a rise in labor costs, leading to an expected $1.1 billion pre-tax charge related to the production of the 777X and 767 jet programs.
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Boeing also made headlines with its decision to reduce its workforce by 10%, laying off hundreds of employees in December, further compounding its financial strain. This decision came after Boeing struggled with its cash position, which threatened to impact its credit rating. As a result, the company launched a $19 billion share sale to bolster its reserves. Despite these issues, Boeing's cash and investments in marketable securities stood at $26.3 billion by the end of Q4.
In terms of production, Boeing managed to deliver 57 aircraft during the fourth quarter, including 36 737 MAX jets, 15 787 Dreamliners, and a few 767 and 777 jets. However, this represents a sharp decline from last year’s figures, as the company only delivered 348 planes for the entire year, a one-third drop compared to the previous year.
On a brighter note, Boeing’s leadership, including CEO Kelly Ortberg, has expressed optimism about the company's recovery. Efforts are underway to stabilize Boeing’s operations, including the resumption of 737, 767, and 777/777X production lines. The company is also eyeing the first delivery of the 777-9 in 2026, despite ongoing challenges with the 777X program, which has faced several delays.
Although Boeing has seen a significant cash flow loss, it is focused on its future, with steps taken to mitigate these losses and rebuild the company’s strength in the coming quarters.
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