Jamie Spencer
Boeing continues to face a challenging year, with its third-quarter earnings report revealing a net loss of $6.17 billion, adding to a total loss of nearly $8 billion so far in 2024. The financial results, which were largely in line with the company’s preliminary report last week, underscore the difficulties Boeing is facing as it navigates production delays, labor disputes, and ongoing cash flow issues. As the company prepares for a critical labor vote, Boeing is under pressure to stabilize its financial outlook and refocus its operations.
Significant Losses and Cash Flow Challenges
Boeing reported a negative operating cash flow of $1.34 billion for the third quarter, a stark contrast to the $22 million in operating cash flow it generated during the same period last year. Revenue for the quarter came in at $17.8 billion, down about 1% from a year ago. The company cited lower commercial widebody deliveries and unfavorable working capital timing, compounded by a work stoppage from the International Association of Machinists (IAM), as major factors behind its financial strain.
On a conference call, Boeing CFO Brian West warned that the company expects to continue burning cash in the fourth quarter, projecting negative free cash flow for the entirety of 2025. Additionally, Boeing revealed that its target of delivering 37 planes for the 737 Max program would be delayed, further affecting its near-term financial performance. Boeing stock fell 3% in early trading following the earnings report.
Production Delays and Financial Adjustments
Boeing has been forced to make significant adjustments to its production and financial strategies. The company announced that it would end production of its 767 tanker jet and delay the release of its highly anticipated 777X widebody jet. These decisions come alongside $5 billion in pre-tax charges, with $3 billion tied to the commercial airlines division and $2 billion attributed to its defense business.
In an effort to shore up its financial position, Boeing has secured $10 billion in supplemental credit from a consortium of banks. The company also filed a mixed shelf registration with the SEC to offer up to $25 billion in new debt securities, common stock, and other offerings. According to sources cited by The Wall Street Journal, Boeing plans to raise $10 billion through a stock offering.
Despite these efforts to raise capital, Boeing’s financial situation remains precarious. The company reported having $10.5 billion in cash and securities on hand at the end of the quarter, while its backlog of orders stands at $511 billion, including more than 5,400 commercial airplanes.
Labor Dispute and Impending Layoffs
One of Boeing’s most pressing challenges is its ongoing labor dispute with IAM, which represents 30,000 workers. The strike has had a significant impact on Boeing’s operations, with the total cost of the work stoppage nearing $5 billion, according to industry estimates. Boeing workers are scheduled to vote on a new contract proposal later on Wednesday, which could bring the dispute to an end.
Newly appointed CEO Kelly Ortberg addressed the importance of resolving the strike, stating, “First and foremost on everybody’s mind today is ending the IAM strike. We have been feverishly working to find a solution that works for the company and meets our employees’ needs.”
In addition to the labor vote, Boeing announced plans to lay off 10% of its workforce—approximately 17,000 employees—across all divisions as part of its effort to reset priorities and create a leaner, more focused organization. The layoffs are expected to begin as early as next month and are seen as a critical step in Boeing’s restructuring.
Outlook: A Long Road to Recovery
Ortberg acknowledged the immense challenges Boeing faces but expressed optimism for the company’s future. “This is a big ship that will take some time to turn, but when it does, it has the capacity to be great again,” he told employees. Boeing’s ability to navigate its current difficulties will depend on resolving labor disputes, managing production delays, and stabilizing its financial outlook.
While Boeing has taken steps to secure additional funding and realign its priorities, the road to recovery is likely to be long and difficult. The company’s focus on building a leaner organization and addressing labor concerns will be essential in regaining its footing in the competitive aerospace market.
Boeing’s third-quarter earnings report paints a picture of a company still reeling from financial and operational setbacks. With billions in losses, production delays, and ongoing labor disputes, Boeing is under pressure to restructure and regain stability. As it looks ahead to 2025, the company’s ability to manage cash flow, raise capital, and resolve labor tensions will be key to its recovery.
