Saying that Boeing is facing "one of the most difficult commercial and financial environments that most of us have ever seen,'' chairman and chief executive Jim McNerney announced that it plans to cut 10,000 jobs, or more than six per cent of its workforce, after a machinists' strike and programme delays led to a fourth-quarter loss, and the global recession eroded demand for aircraft.

The job reductions include 4,500 its Puget Sound base that were previously announced by Boeing Co. The additional 5,500 job cuts, to come mostly through layoffs and attrition, will be across the company, including Washington state, where nearly half of Boeing's 162,000 employees worked at the end of last year.

The new target was disclosed in a conference call on Wednesday after the Chicago-based company - the world's second-largest maker of commercial planes and the number two US defence contractor - reported a net loss of $56 million after a year-earlier profit, and said 2009 earnings will be lower than analysts predicted.

Boeing expects an increase in cancelled or deferred orders this year as airlines cope with a drop in travel demand and tight credit. Almost a third of the world's carriers are likely to defer deliveries this year, up from eight per cent three months ago, a survey released last week by UBS Investment Research showed.

"We can and must prepare for the continued market uncertainty," McNerney, 59, said on the call. The company is taking steps to manage costs and investments more aggressively, he said.

The 5,500 new job cuts will be spread out over the year, with emphasis on the first half, and will come from support services, corporate positions and the defence side of the business, McNerney said.

He also said he's planning "additional measures to further strengthen the team" after making personnel changes at the commercial unit last month. The CEO didn't elaborate on those plans, and spokesman Todd Blecher said he had no further information.

The plane maker's fourth-quarter net loss was eight cents a share, compared with net income of $1.03 billion, or $1.36 a share, a year earlier. Sales decreased 27 per cent to $12.7 billion.

Six planes on order were cancelled last year and 110 were deferred, affecting about three per cent of Boeing's backlog, McNerney said. That figure will be "somewhat" higher in 2009, Blecher said after the call.

The cancellations will likely just reduce the company's so-called over-bookings, the CEO said. For example, there are about 15 per cent more orders for the 737 than the company can produce. The company didn't issue a forecast in the third-quarter results because of the strike and the global recession and credit crunch.

Dreamliner woes

Earnings also are being weighed down by development costs on the delayed 787 Dreamliner, which is now due to reach the first customer in early 2010, about two years later than planned. An eight-week machinists' strike that ended 2 November, as well as design changes, added to the delays and costs for the 787 and other new programmes, and stripped $1.8 billion from full-year earnings.

A customer who asked to remain unidentified (but reportedly a Russian airline) recently cancelled all 15 of the 787 Dreamliners it had on order. McNerney said this was more because of the business environment the customer faced than because of the delays.

He added that more of the 895 remaining orders could be cancelled this year. He said of the 748-8 programme still has more than 100 orders, but mostly for a freighter version and not the passenger model.

Boeing shipped 50 aircraft in the quarter, 70 fewer than planned, hurting revenue by $4.3 billion and setting it further behind Airbus SAS, its only larger rival commercial-plane maker. New orders will probably be lower than deliveries this year, McNerney said.

Boeing said it plans to deliver 480 to 485 planes this year, less than its July estimate of 500 to 505, and may have to provide $1 billion in financing through Boeing Capital Corp to customers who can't find funding elsewhere.

It shipped 375 planes last year, below its earlier plan of at least 475.

"Obviously we can do more than a billion dollars, and we'll have to see on a case-by-case basis what makes sense," chief financial officer James Bell said on the call. He said he expects production rates to remain stable throughout Boeing's forecasting planning period, though "the out-years are less certain."

Despite the gloomy picture reflected by the financial results and new job cuts, there are bright spots. Boeing met enough of its 2008 financial targets to permit an employee incentive plan. That plan will pay out six extra days. Companywide there are 110,000 eligible recipients who will receive an estimated $220 million. The extra pay should show up in employee checks next month.

The machinists' union, which represents about 27,000 Boeing employees in the Puget Sound area, is not included in the plan.

Boeing did much better in exceeding its 2007 financial goals, and the plan paid an additional 15 extra days' salary pay in February 2008. "Fundamentally, this is a solid company with a strong growing core business,'' McNerney said.

Significantly, Boeing should be able to maintain current production rates even if a lot of orders are deferred or even cancelled in 2009 - because the company Boeing overbooked production slots. Keeping assembly lines operating at current rates means Boeing is less likely to need production-related job cuts.