US aerospace giant Boeing announced today its third-quarter net profit plunged 38 per cent to US695 million (US$2.55 billion) from a year ago, citing a crippling labour strike and parts supply problems. Earnings per share declined 33 per cent to 96 cents, lower than analysts' consensus forecast of 99 cents. Third-quarter revenues fell seven per cent to $15.3bn, from $16.5bn in the same period in 2007, "as labour strike and supplier production problems pushed airplane deliveries out of the quarter," stated Boeing.
The hindered production has sparked fears that the launch of its new fuel-efficient 787 Dreamliner commercial plane will have to be pushed further back, after a six-month production delay was announced last year. Etihad Airways ordered 45 planes from Boeing in July worth about $8.9bn, including 35 Boeing 787 Dreamliners to be delivered between 2011 and 2020. Gulf Air also last month firmed up an order for eight new Boeing 787 Dreamliners, raising to 24 the number of new planes it is awaiting delivery. When the deal was initially agreed in January it was valued at about $3.9bn at the list prices then, with the first order expecting delivery in 2016.
Boeing said the decline in earnings reflects "an ongoing machinists' strike and supplier production challenges on customer-furnished galleys for certain wide-body airplanes" which reduced third-quarter commercial aeroplane deliveries by approximately 35 units and net earnings by an estimated 60 cents a share. The strike by machinists, begun on September 6, is estimated to be costing the company $100m per day. According to a running union tally, the 47-day-old strike has cost Boeing more than $4.6bn to date.
During the July-Sept period, Boeing delivered 84 aircraft, compared with 125 in the second quarter and 115 in the first quarter. "That (strong) balance sheet, along with our broad-based, record 349-billion-dollar backlog, gives us exceptional flexibility for weathering an extended work stoppage and for adapting to circumstances that may arise from the global financial crisis and softening global economy," said Jim McNerney, Boeing chairman, president and chief executive.
The International Association of Machinists Local 751 says the union was maintaining its fight to keep its members' jobs from being outsourced. Boeing's 27,000 machinists represent 16 per cent of the company's workforce. The company and the union have agreed to resume federally mediated contract talks tomorrow. *AFP with additional reporting by Paul Driscoll