Saturday, January 25, 2025
Boeing has announced that it anticipates a staggering $4 billion loss in the fourth quarter of 2024, highlighting a turbulent year for the aerospace giant. The loss stems from a combination of factors, including a seven-week labor strike by International Association of Machinists and Aerospace Workers (IAM) members and significant pre-tax charges in the Defense, Space & Security division. The financial report, slated for release on January 28, 2025, will underscore the challenges Boeing faced in stabilizing its operations.
The IAM labor strike was a key disruptor for Boeing’s Commercial Airplanes division, affecting production schedules and delivery capabilities. This disruption has led to pre-tax earnings charges of $1.1 billion on the 777X and 767 programs. The 777X program alone incurred $900 million in charges due to increased labor costs associated with finalizing the IAM agreement. Despite these challenges, Boeing reaffirmed its commitment to delivering the first 777-9 aircraft by 2026.
The company reported fourth-quarter revenue of $4.8 billion for Commercial Airplanes, with an operating margin of negative 43.9%. These figures reflect the cascading effects of labor shortages and delayed production timelines, further compounded by rising manufacturing costs.
Boeing’s Defense, Space & Security division has also been hit hard, with pre-tax earnings charges totaling $1.7 billion across multiple programs. Key impacts include:
Despite these setbacks, the division reported revenue of $5.4 billion for the quarter, with an operating margin of 41.9%.
Boeing expects fourth-quarter revenue to total $15.2 billion, with a GAAP loss per share of $5.46. The company’s operating cash flow for the quarter stands at $3.5 billion, supported by a cash and investments reserve of $26.3 billion. These figures highlight the resilience of Boeing’s financial foundation, despite the near-term challenges.
Kelly Ortberg, Boeing’s CEO, emphasized the company’s efforts to stabilize its operations. “Although we face near-term challenges, we took important steps to stabilize our business during the quarter, including reaching an agreement with our IAM-represented teammates and conducting a successful capital raise to improve our balance sheet.”
Boeing has resumed production on several key programs, including the 737, 767, and 777/777X lines. These efforts signal a return to normalcy and reflect the company’s commitment to meeting long-term production goals. The company remains optimistic about the potential of its 777X program, despite delays and rising costs.
The defense sector has become a focal point for Boeing’s financial challenges, with multiple programs experiencing cost overruns and schedule delays. The KC-46 Pegasus, a tanker aircraft critical to Boeing’s defense portfolio, faced significant cost increases, as did the T-7A Red Hawk advanced trainer aircraft. These challenges underscore the complexities of modern defense manufacturing and the importance of stringent cost management.
Boeing’s financial outlook for 2025 includes a renewed focus on stabilizing production schedules and reducing costs. The company aims to build on its successful capital raise and workforce agreements to strengthen its balance sheet. Additionally, the anticipated delivery of the first 777-9 aircraft in 2026 remains a key milestone for the company’s recovery.
Boeing’s projected $4 billion loss for Q4 2024 highlights the significant challenges faced by the aerospace industry, from labor disruptions to rising manufacturing costs. While the company has made strides in stabilizing its operations, the road to recovery will require continued focus on cost management, operational efficiency, and program execution. As Boeing navigates these hurdles, its ability to adapt and innovate will be critical in shaping its future trajectory.
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