Boeing burns $3 billion cash as strike stunts profits

23 October 2008

Topping projections of a $1.4 billion loss on account of the strike by its machinist union, Boeing has so far incurred a loss of around $3 billion in cash in the last quarter. 

The second-largest commercial-plane maker in the world saw $3 billion in cash evaporate last quarter as a strike by machinists brought to a grinding halt virtually all aircraft production, and hit the company's revenues. It has also cleaned out around 35 cents per share off the company's third-quarter earnings, according to Boeing's chief financial officer James Bell. 

That means the strike has thus far cost Boeing around 1.4 cents per share for every single day since it began on 6 September, till the end of the last quarter. Boeing's profit fell 38 per cent, higher than analyst's expectations.

27,000 machinists from Boeing's facilities in Oregon and Kansas have struck work in protest of Boeing's contract offer with their core disagreement hinging around the company's plans to shift more jobs to non-union and foreign companies. (See: Boeing's strike costs the company $1.4 billion)

Boeing's revenues are determined by deliveries, which have come to a standstill ever since the machinists stopped working on Boeing's planes. However, the company is still well capitalized enough to manage the strike as well as help its customers finance planes if need be. 

Boeing has lost 51 per cent of its market value this year. Its net income dropped to $695 million, or 96 cents a share, from $1.11 billion, or $1.44, a year earlier. Revenue fell 7.4 per cent to $15.3 billion, Boeing said in a statement. A number of analysts had projected around $14.7 billion.