Strike, 747-8 Delays To Blame For Drop In Planemaker's
Fortunes
The mighty have fallen. On Wednesday, Boeing told investors it
lost $56 million in the fourth quarter of 2008... and said it plans
to more than double the number of layoffs previously announced for
2009, cutting its workforce by 10,000 positions.
The loss contrasts sharply with the $1.03 billion profit Boeing
posted for the same period in 2007. Quarterly revenues plummeted 27
percent to $12.7 billion, while operating losses came to $205
million.
The American planemaker blamed the bulk of its Q4 losses on the
58-day strike by the International Association of Machinists, which
halted Boeing's production lines and prevented the company from
collecting money on delivered aircraft.
"The progress we made in many areas of Boeing during 2008 was
outweighed by the impact of the strike and our performance on some
key development programs," said Boeing CEO Jim McNerney. "Our
imperative going forward is improving execution where it needs to
be improved, maintaining strong performance across all our
production programs, and preserving our financial strength to grow
in these challenging economic times."
McNerney also noted a costly redesign for its upcoming 747-8
freighter and Intercontinental passenger variant hit the
planemaker's balance sheet hard, though not nearly as badly as the
strike.
Boeing still made money in 2008, to the tune of $2.7 billion...
but that's a 34 percent drop from a year earlier. Revenues slipped
eight percent, to $60.9 billion.
Most troubling in Wednesday's report, however, was the news
Boeing plans to cut 10,000 jobs this year, as a slumping economy is
expected to hit Boeing's sizable order backlog.
"The global economy continues to weaken, and it's affecting air
traffic and financing," said Boeing CEO Jim McNerney. "We must
prepare the company, including being more aggressive in terms of
productivity."
Those job cuts will be made "through attrition, retirement and
layoffs," McNernery added.
As ANN reported, Boeing announced earlier this
month it planned to cut 4,500 jobs by the end of 2008; the latest
figure includes those earlier cuts.
Despite the slump, Boeing expects "continued growth" in its
commercial aircraft and defense segments. The company also boldly
predicted Boeing's profits would return to 2007 levels shortly, as
the company's operations normalize.
"The financial guidance continues to assume stable delivery
levels for in-production commercial airplanes over the next several
years, but also considers operational and market risks," the
company said.
Boeing investors responded positively to that statement, as
shares rose 2.3 percent Wednesday to just over $43. Analysts aren't
so sure, though... especially as Boeing's assurances don't carry as
much weight as they once did, due largely to numerous unmet
promises on the troubled 787 Dreamliner program.
Analyst Peter Cohan, of Peter Cohan & Associates, told
Bloomberg that Boeing "disappointed analysts on its results and
outlook... It looks like things are going to get worse for Boeing
before they get better."