Boeing, one of the leading aerospace companies in the world, recently reported a substantial loss of $6.17 billion in the third quarter of the year. This loss brought their total losses for the year to nearly $8 billion. These financial struggles have put the company in a precarious position, especially as it faces an important union vote that could significantly impact its future.
In addition to the staggering financial loss, Boeing also reported a negative operating cash flow of $1.345 billion. This was largely due to unfavorable working capital timing, as well as lower commercial widebody deliveries. The company’s revenue decreased by approximately 1% compared to the same period last year, with total revenue coming in at around $17.8 billion.
Boeing’s new CEO, Kelly Ortberg, addressed these disappointing financial results in a message to employees, acknowledging that the company was facing significant challenges. Ortberg emphasized the need for time to reverse course and expressed confidence in Boeing’s potential for future success.
As part of its efforts to navigate this difficult financial landscape, Boeing announced several strategic moves. The company revealed that it would cease production of its 767 cargo jet and delay the release of its highly anticipated 777X widebody jet. Additionally, Boeing announced $5 billion in pre-tax charges, with $3 billion attributable to the commercial airlines division and $2 billion to the defense business.
To strengthen its financial position, Boeing secured $10 billion in supplemental financing from a group of banks and initiated a mixed shelf registration with the SEC for up to $25 billion in new debt securities and equity offerings. The company also plans to implement a $10 billion stock offering as part of this registration process.
Despite these financial challenges, Boeing reported having $10.5 billion in cash and securities at the end of the quarter. The company also disclosed a backlog of $511 billion, which includes orders for more than 5,400 commercial airplanes.
In the midst of these financial struggles, Boeing is also facing a labor dispute with its main labor union, which represents 30,000 workers. In response, the company has implemented a new credit agreement and is pursuing debt and stock offerings to bolster its financial stability.
In an effort to streamline operations and cut costs, Ortberg announced plans to reduce Boeing’s workforce by 10%, or approximately 17,000 employees, across all divisions. These job cuts are expected to begin as soon as next month and are intended to position the company for future success.
One of the key factors contributing to Boeing’s financial challenges is the ongoing labor dispute with the International Association of Machinists (IAM). The union vote taking place on Wednesday will determine whether Boeing employees accept or reject a new contract proposal. The resolution of this dispute is crucial for both the company and its employees, as it has already incurred significant costs for all parties involved.
“We are working tirelessly to find a solution that benefits both the company and our employees,” Ortberg emphasized. “Our priority is to bring an end to the IAM strike and refocus our efforts on building a stronger, more efficient organization.”
As Boeing navigates these challenging times, the company remains focused on its mission to deliver innovative aerospace solutions and maintain its position as a global industry leader. While the road ahead may be difficult, Boeing is determined to overcome its current challenges and emerge even stronger in the future.
