Boeing's Q3 Loss Widens But Tonight's Key Point is the Union Vote

Boeing released an earnings report on Wednesday, which showed a further widening of its core loss in the third quarter, with overall revenue coming in below expectations.

 

 

However, Boeing factory workers voted Wednesday to reject the company’s latest contract offer and to continue a six-week strike that has halted production of the aerospace giant’s bestselling jetliners.

 

The strike has jeopardized Boeing's already strained finances, putting its credit rating in danger of being downgraded to junk status and stalling production of some of its best-selling airplanes. Even before the strike, Boeing experienced the intense scrutiny its safety record faced after a dangerous air hatch blockage in January.

 

 

 

The 751 branch of the International Association of Machinists and Aerospace Workers (IAM), which represents the workers, said the updated proposal includes a $7,000 bonus and an incentive program for returning to work. Employees will also get more input into their 401(k) retirement plans, including a one-time $5,000 contribution and an employer contribution of up to 12%.

 

 

The IAM said details of potential strike settlements such as dates for workers to return to work will be part of the vote. Even with the labor action over, new Boeing CEO Kelly Ortberg said the company still faced the challenge of returning to its 'former glory'.

 

 

 

Kelly Ortberg said, “Going forward, we will focus on fundamentally changing the culture, stabilizing the business, improving program execution, and laying the foundation for Boeing's future.”

On the financial front, Boeing's operating cash flow declined to negative $1.35 billion for the three months ended Sept. 30, reflecting lower commercial widebody deliveries, unfavorable timing of working capital, and the impact of strikes.

 

 

 

Quarterly revenue at Boeing's vital commercial airlines unit fell 5 percent to $7.44 billion, below the Bloomberg consensus estimate of $7.66 billion. Total revenue for the group as a whole came in at $17.84 billion, also below expectations.Core loss per share also widened to $10.44 from $3.26 in the same period in 2023.

 

 

 

Boeing had previously filed a registration statement with U.S. market regulators allowing it to raise $25 billion through a mix of debt securities and other types of stock. In that filing, the embattled airplane maker did not specify the exact timing or amount of money it would raise through the offering. However, some media reports have suggested that the stock sale could take place before the end of the year due to the impending maturity of the debt.

 

 

 

The company also announced that it had secured a $10 billion credit line from banks including JPMorgan Chase, Bank of America, Citigroup, and Goldman Sachs to strengthen its financial position. Boeing had previously said it would book a $5 billion loss in the third quarter and unveil plans to cut 10 percent of its global workforce.

 

 

 

Kelly Ortberg told employees earlier this month that 'tough decisions', such as restructuring, would need to be made to improve overall business performance and ensure the company's long-term competitiveness.

 

 

 

Boeing closed down about 3% as of the US market close.