Boeing Hit by Labor Dispute and Defense Charges in Q4

January 24, 2025 — Boeing has announced it will recognize significant impacts on its fourth-quarter financial results due to the recent work stoppage and subsequent agreement with the International Association of Machinists and Aerospace Workers (IAM), as well as charges related to several defense programs. The company will formally report its Q4 results on January 28th.

Preliminary figures released by Boeing project fourth-quarter revenue of $15.2 billion, a GAAP loss per share of ($5.46), and negative operating cash flow of ($3.5) billion. Despite these challenges, the company’s cash and investments in marketable securities remain substantial at $26.3 billion at the end of the quarter.

IAM Agreement and Production Restart:

“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,” said Kelly Ortberg, Boeing president and chief executive officer. Ortberg also noted the restart of 737, 767, and 777/777X production, emphasizing the company’s focus on rebuilding for the future.

Commercial Airplanes Impacted by Work Stoppage:

The Commercial Airplanes division will bear the brunt of the IAM work stoppage and agreement, with lower deliveries and pre-tax earnings charges of $1.1 billion on the 777X and 767 programs. Specifically, the 777X program will incur a $0.9 billion pre-tax charge due to higher estimated labor costs associated with the finalized IAM agreement. These costs will be spread over the next several years. Despite these setbacks, Boeing maintains its expectation for the first 777-9 delivery in 2026. Commercial Airplanes expects to report fourth-quarter revenue of $4.8 billion and an operating margin of (43.9) percent.

Defense Segment Faces Significant Charges:

Boeing’s Defense, Space & Security segment will also report significant pre-tax earnings charges totaling $1.7 billion across several programs, including the KC-46A, T-7A, Commercial Crew, VC-25B, and MQ-25. The KC-46A program faces a $0.8 billion pre-tax charge due to higher estimated manufacturing costs, partly attributable to the IAM work stoppage and agreement. The T-7A program will incur a $0.5 billion pre-tax charge, primarily driven by increased cost estimates for production lots in 2026 and beyond. Defense, Space & Security expects to report fourth-quarter revenue of $5.4 billion and an operating margin of (41.9) percent.

Looking Ahead:

While the fourth-quarter results reflect significant challenges for Boeing, the company has taken steps to address these issues, including reaching a labor agreement, restarting production, and bolstering its financial position. The company's focus remains on navigating these near-term obstacles and building a stronger future.

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