Boeing's Disastrous Quarter

Boeing's Troubles Continue

Boeing's recent streak of unfortunate events continues, with the company's satellites now randomly exploding in space. To add to the company's woes, Boeing has reported another set of disastrous earnings, just hours before a labor vote where workers will decide whether to end their ongoing strike.

Boeing's Financial Woes

For Q3, Boeing reported a net loss of $6.17 billion, bringing the total losses in 2024 to a staggering $8 billion. This was on revenue of $17.84 billion, which was down 1% from a year ago, and missed estimates, and generated an adjusted cash burn of $1.96 billion, also worse than expected. The company's commercial airplane division had an operating loss of about $4 billion, while the defense and space business lost $2.38 billion in the quarter. The company's net cash declined by about $2.1BN to $10.5BN, and while the consolidated debt was roughly unchanged and still investment grade, rating agencies have both warned that Boeing is about to be junked unless it raises billions in new cash.

Boeing's Backlog and Future Plans

The company reported a total backlog of $511 billion, which included over 5,400 commercial airplanes. New CEO Kelly Ortberg laid out a four-pronged plan that includes rebuilding a culture where management is close to the action to prevent “the festering of issues.” He also insisted that Boeing can’t lose focus on building an all-new airplane. “Boeing is an airplane company and at the right time in the future, we need to develop a new airplane,” Ortberg said in prepared remarks to investors. “But we have a lot of work to do before then.”

Boeing's Labor Disputes and Layoffs

Boeing is currently embroiled in a labor dispute with its largest labor union, representing 30,000 workers. CEO Ortberg announced that the company would lay off 10% of its labor force, or around 17,000 employees, across all the divisions to shore up its financial position. The layoffs will occur as Boeing’s labor dispute with the International Association of Machinists (IAM) may be nearing a close. Boeing workers will vote later on Wednesday whether to approve a new contract proposal. The cost of the strike so far has been substantial for both Boeing and the workers, with one trade group estimating the total cost is nearing $5 billion.

Investor Expectations

For investors, the main event will be the strike vote later today, said Ken Herbert, an analyst with RBC Capital Markets. When Ortberg and Boeing Chief Financial Officer Brian West host an earnings call later this morning, listeners will be looking for details on the underlying state of Boeing’s business during the labor strife and its plans for recovery.

Bottom Line

Boeing's recent struggles highlight the challenges that large corporations face in managing various aspects of their business, from labor disputes to product development and financial management. It's clear that Boeing has a long road ahead to return to its former glory. What are your thoughts on Boeing's current situation? Do you think the company can recover from its current predicament? Share your thoughts and this article with your friends. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.