Boeing (BA) released preliminary fourth-quarter results, revealing a significant $3.5 billion operating cash flow loss. This substantial loss is attributed to several factors, including the International Association of Machinists (IAM) work stoppage, workforce reductions, and adjustments within its defense business. These preliminary figures offer insights into the challenges Boeing faced during the quarter and the steps being taken to address them.
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The company anticipates reporting revenue of $15.2 billion, falling short of the $16.76 billion consensus estimate. GAAP loss per share is projected at $5.46, significantly higher than the estimated loss of $1.32. Furthermore, Boeing expects to incur pre-tax charges of $1.7 billion in its defense and space business. Despite these challenges, Boeing stock saw a marginal increase in early trading.
Navigating Near-Term Challenges and Stabilizing the Business
Boeing President and CEO Kelly Ortberg acknowledged the near-term challenges while highlighting the company’s efforts to stabilize operations. These efforts include reaching an agreement with IAM-represented employees, securing capital to bolster the balance sheet, and restarting production for the 737, 767, and 777/777X aircraft programs. Ortberg emphasized the company’s commitment to building a stronger future.
IAM Strike Impact and Labor Costs
The eight-week IAM strike, which concluded in November with a new four-year contract, resulted in pre-tax charges of $1.1 billion for the 777X and 767 jet programs due to increased labor costs. The new contract includes a 38% pay increase over four years for IAM members, a combined ratification and lump sum payment of $12,000, increased 401(k) matching, and lower healthcare premiums.
Workforce Reductions and Production Updates
Following the strike, Boeing implemented workforce reductions at its Washington state and California facilities, part of a previously announced plan to reduce headcount by 10%. In December, hundreds of workers were laid off.
Despite these challenges, Boeing reported delivering 57 planes in the fourth quarter, including 36 737 Max jets, 15 787 Dreamliners, three 767s, and three 777 jets. However, total deliveries for the year reached 348 commercial jets, marking a significant decline compared to the previous year.
Addressing Cash Position and Investment Credit Rating
In November, Boeing addressed concerns about its cash position and investment credit rating by launching a $19 billion share sale to increase cash reserves. At the end of Q4, cash and investments in marketable securities totaled $26.3 billion.
Looking Ahead to Full Financial Results
Boeing’s full fourth-quarter and full-year results will be released on January 28 before the market opens. These results will provide a more comprehensive understanding of the company’s financial performance and outlook. The preliminary figures suggest a challenging quarter, marked by significant losses and operational adjustments. However, Boeing’s leadership remains focused on navigating these difficulties and positioning the company for future growth.
