Boeing expects $4 billion loss for fourth quarter after chaotic 2024

Boeing Faces Massive Fourth-Quarter Loss Amid Safety Concerns, Strikes, and Financial Woes

Boeing announced on Thursday that it is bracing for a significant financial hit, estimating a loss of approximately $4 billion for the fourth quarter of 2024. This latest setback compounds a turbulent year for the aerospace giant, which began with a high-profile midair accident and ended with a crippling labor strike and layoffs.

Financial Struggles and Analyst Expectations
Boeing disclosed that it expects a per-share loss of $5.46 for the quarter, far below Wall Street expectations. Additionally, the company projected quarterly revenue of $15.2 billion, which falls short of the estimates made by analysts at LSEG.

One of the most alarming figures released by Boeing is its anticipated cash burn of approximately $3.5 billion during the fourth quarter. To mitigate its ongoing financial struggles, the company secured more than $20 billion in liquidity throughout the quarter, a move aimed at stabilizing its cash flow and reinforcing its balance sheet in the face of multiple crises.

The company has not posted an annual profit since 2018, a streak that underscores the prolonged challenges Boeing has faced, particularly in the wake of safety concerns, production issues, and a weakened demand for aircraft.

Impact of Labor Strikes and Production Challenges
Boeing’s commercial aircraft division has faced significant disruptions due to a nearly two-month machinists' strike that began in September 2024. The strike, which primarily affected Boeing's production facilities in the Puget Sound region, brought much of its commercial aircraft assembly lines to a halt. A new labor contract agreement was reached in November, but the impact of the work stoppage has been severe.

The company expects to take a $1.1 billion charge on its 777X and 767 programs due to strike-related delays and additional costs associated with its new labor agreement.

CEO’s Response and Future Outlook
Despite the dire financial outlook, Boeing CEO Kelly Ortberg remains cautiously optimistic about the company’s long-term prospects.

“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,” Ortberg said in a press release.

Safety Crisis and Federal Scrutiny
Boeing's struggles have been exacerbated by a midair accident in January 2024, when a door plug detached from a 737 MAX 9 during flight. This incident reignited safety concerns that the company had been trying to put behind it following the fatal crashes of Lion Air Flight 610 in 2018 and Ethiopian Airlines Flight 302 in 2019.

The latest incident triggered increased federal scrutiny, including deeper investigations by the Federal Aviation Administration (FAA) and other regulatory bodies. As a result, Boeing has experienced delivery delays, as airlines and regulators closely examine the company’s manufacturing and quality control processes.

Commercial and Defense Sector Losses
Boeing’s commercial aircraft division, which is a key revenue driver, is expected to report revenue of $4.8 billion for the fourth quarter, with a staggering negative operating margin of nearly 44%. This performance highlights the severe financial pressure on the unit, particularly as it grapples with safety-related delivery delays and production challenges.

Meanwhile, Boeing’s defense sector is also facing substantial financial setbacks. The company expects to record pretax charges totaling $1.7 billion, stemming from issues with its KC-46A tanker program, delays associated with the new Air Force One aircraft (747-8), and continued struggles within its space programs.

Looking Ahead
As Boeing navigates these turbulent times, investors, employees, and industry analysts will be closely monitoring the company’s next steps. The aerospace giant must address its manufacturing and safety concerns while stabilizing its financial position.

The coming months will be critical for Boeing as it works to rebuild confidence among airlines, regulatory agencies, and the general public. Whether the company can overcome these challenges and return to profitability remains to be seen, but the road ahead appears daunting.


Source: CNBC