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Boeing sees $3.5B cash flow loss due to labor strikes and layoffs in the fourth quarter

Boeing (BA) reported preliminary fourth quarter results on Thursday after the bell, estimating a whopping $3.5 billion operating cash flow loss due to the effects of the IAM (International Association of Machinists) work stoppage alongside workforce reductions and changes to its defense business.

For the quarter, Boeing expects to report revenue of $15.2 billion versus $16.76 billion per Bloomberg consensus estimates on a GAAP loss per share of $5.46 vs loss of $1.32 estimated. Boeing also expects to take pre-tax charges of $1.7 billion in its defense and space business.

Boeing shares were down 1% in after hours trade.

“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. “We also restarted 737, 767 and 777/777X production and our team remains focused on the hard work ahead to build a new future for Boeing.”

Boeing said the IAM strike, which concluded in November with a new four-year contract, will lead to higher labor costs, resulting in pre-tax charges of $1.1 billion for the 777X and 767 jet programs.

Following the 8-week strike, Boeing upped the pay of IAM members by 38% over four years, merged the prior $7,000 ratification bonus with a $5,000 lump sum payment for a total $12,000 into 401(k) plans or as a cash payout; increased its 401(K) match; and lowered health care premiums, among other things.

In early December Boeing laid off hundreds of workers at its base in Washington state, as well as California. The company had previously said it would reduce its headcount by 10%.

Earlier this month Boeing reported that it delivered 57 planes in the fourth quarter, with 36 of them being the 737 MAX jet, 15 787 Dreamliners, as well as three 767 and three 777 jets. For the year Boeing said it delivered 348 commercial jets, down a third compared to a year ago.

In November, Boeing’s dwindling cash position threatened the company’s investment credit rating, which led to it announcing that it would launch a $19 billion share sale to boost cash reserves. Boeing said at the end of Q4 cash and investments in marketable securities stood at $26.3 billion.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.

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