Ads
Boeing is currently facing a challenging period as it deals with a significant loss of $6.17 billion in the third quarter of 2024. This brings the total losses for the year to nearly $8 billion. The company’s operating cash flow was also negative at $1.345 billion. Despite these financial setbacks, Boeing’s revenue decreased by only about 1% compared to the same period last year, totaling approximately $17.8 billion. These figures were in line with the preliminary numbers released by the company last week.
The decline in Boeing’s operating cash flow was attributed to various factors, including unfavorable working capital timing and the impact of the work stoppage by the International Association of Machinists (IAM). Additionally, lower commercial widebody deliveries also contributed to the negative cash flow, which stood at $22 million a year ago.
In a message to employees regarding the financial results, newly appointed CEO Kelly Ortberg acknowledged the challenges ahead for Boeing. He mentioned that the company is like a substantial vessel that will take some time to reverse course, but once it does, it has the potential to excel once more.
Last week, Boeing announced its decision to halt production of the 767 cargo jet and delay the launch of the upcoming 777X widebody jet. The company also revealed that it would incur $5 billion in pre-tax charges, with $3 billion attributed to the commercial airlines division and $2 billion to the defense business.
To bolster its financial position, Boeing secured $10 billion in supplemental financing from a consortium of banks and filed a mixed shelf registration with the SEC to raise up to $25 billion through new debt securities, common stock, preferred stock, and other share offerings. Sources indicate that Boeing plans to conduct a $10 billion stock offering as part of the registration process.
At the end of the quarter, Boeing had $10.5 billion in cash and securities and a total backlog of $511 billion, which included over 5,400 commercial airplanes. However, the company is grappling with a labor dispute with its main union, the IAM, which represents 30,000 employees. Boeing has made changes to its credit agreement and initiated debt and stock offerings to address the financial challenges posed by the ongoing labor conflict.
To strengthen its financial standing, Ortberg announced that Boeing would reduce its workforce by 10%, which translates to approximately 17,000 employees across all divisions. These job cuts are expected to begin as soon as next month in anticipation of the resolution of Boeing’s labor dispute with the IAM. Employees are set to vote on a new contract proposal on Wednesday, which will determine the future course of the relationship between Boeing and its workers.
The IAM strike has had a significant impact on both Boeing and its employees, with estimated costs approaching $5 billion. Ortberg emphasized that the primary focus at present is the resolution of the strike to ensure the interests of both the company and its workers are met.
In conclusion, Boeing is navigating through a challenging period characterized by significant financial losses and a labor dispute. The company is taking proactive measures to address these issues and is hopeful that with strategic decisions and focused efforts, it can overcome the current challenges and emerge stronger in the future.
