Yesterday, Boeing reported their third-quarter information. According to their website, “Third-quarter revenues declined to $15.3 billion from $16.5 billion as labor strike and supplier production problems pushed airplane deliveries out of the quarter. EPS declined to $0.96 per share, reduced by an estimated $0.60 on the lower deliveries and by $0.08 due to tax adjustments. Backlog grew to a record $349 billion as near-term demand remains strong.” I remember hearing that for every day this strike went on, Boeing loses $100 million dollars in revenue. This strike has been going on since… well… for 46 days. You’d think that corporate would get a little sick of losing so much money a day. Yet, I think Boeing is doing the best they can in leveraging for the future. The big issue with the strike is job security; something that I would like to see Boeing comply with. EADS recently opened up a plant in China to produce A32X series aircraft. I would NOT like to see that happen to Boeing. Enough ranting…
Let’s get into the good stuff. Boeing delivered 84 airplanes this quarter, which is 34 aircraft behind schedule. Their order backlog increased to $276 billion dollars worth; 149 orders were made for aircraft this quarter. Boeing currently has 625 aircraft year-to-date in the order books. BCA’s operating margins were cut in two, from 11.4% (Q3 2007) to 5.7%.
The 787 has been moving along. Assembly of the 4th flight-test aircraft has begun. The aircraft has completed hydraulic testing and high pressurization testing. They have begun testing the landing gear and flight controls of the aircraft. The 747-8 has been moving along as well. Engineering of the 747-8 freighter variant is 95% complete, and production of the aircraft is expected to begin shortly. Boeing has said that they are currently facing some cost and schedule pressures for the 747-8, which is no surprise (IAM strike).
Overall, I can’t say I’m shocked or surprised by some of these figures. It’s no doubt that the IAM strike and supplier issues have hurt Boeing. The sooner the IAM contracts are resolved, the sooner we’ll see Boeing back to tip-top shape. Unfortunately I think the company may be sending the image of an unreliable aircraft supplier, which I think Boeing’s CEO James McNerney is trying to fix. Multiple strikes within 5 years, for an OEM, may push some airlines to ‘the other side’ (AKA Airbus). Let’s hope this can be fixed soon.
If you’d like to learn more about their other industries, such as Integrated Defense Systems, you can go here.
Image (Machinists picket outside the Everett production plant) : flickr.com
