Boeing Co. (BA) is gearing up to release its third-quarter 2024 earnings on Wednesday, October 23, ahead of market opening. The report arrives amidst a tumultuous period for the company, marked by significant financial pressures and a high-stakes labor vote that could potentially bring an end to a 41-day strike.
Financial Headwinds and Program Delays
Analysts predict Boeing will report an adjusted loss per share of $8.11, with revenue projected at $17.9 billion, highlighting the formidable challenges the company faces across its commercial and defense segments. These difficulties stem from delays in key programs and the ongoing labor dispute.
Labor Negotiations: A Potential Turning Point
Union members from the International Association of Machinists and Aerospace Workers (IAM 751) are poised to decide whether to accept a new labor deal that could end the strike, which began on September 13. The strike has disrupted production at crucial Boeing facilities and strained supply chains.
The proposed labor agreement offers substantial wage increases of 35% over the contract’s duration, extending through September 2028, along with a $7,000 ratification bonus. Boeing has pledged to contribute $5,000 to employees’ 401(k) plans and will match employee contributions up to 8% of their annual pay. By the end of the contract, hourly wages for experienced workers could reach $70 per hour, equivalent to approximately $140,000 annually, before overtime and additional bonuses.
However, the proposal excludes the defined benefit pension that union workers had sought. If ratified, this deal could enable Boeing to resume normal operations, easing the financial strain caused by the strike. Analysts, including Ronald J. Epstein of Bank of America, are optimistic about members voting in favor of the deal, particularly given the involvement of U.S. Secretary of Labor Julie Su in negotiations. Even a narrow victory would mark a critical turning point for Boeing, allowing it to refocus on production and implement broader restructuring plans, including a potential $25 billion equity raise and a 10% workforce reduction.
Impact of Program Delays
Boeing’s expected results reflect the impact of substantial charges stemming from delays in key programs. According to Goldman Sachs analyst Noah Poponak, CFA, the company anticipates a $2.6 billion pre-tax charge on its 777X program due to revised assessments of certification and delivery timelines. The first delivery of the 777-9 is now projected for 2026, while the 777-8 has been pushed back to 2028. These delays, coupled with disruptions from the IAM strike, have significantly impacted Boeing’s cash flow and margins in the past quarter.
Beyond the 777X program, Boeing is also facing a $0.4 billion charge related to winding down 767 freighter production as the company transitions to solely producing the 767-2C model for the KC-46A Tanker program starting in 2027.
The company expects a $2 billion pre-tax charge across various defense programs, including the T-7A and KC-46A. The T-7A program is experiencing higher estimated costs on production contracts extending into 2026 and beyond, resulting in a $0.9 billion charge. The KC-46A program will see a $0.7 billion charge, partly attributed to the termination of 767 freighter production and the effects of the ongoing strike.
Stock Performance Under Pressure
Boeing’s stock has endured a challenging year, declining 38% year-to-date, marking its worst annual performance since 2008. However, October has seen signs of recovery, with shares increasing 5% so far this month, potentially ending a two-month losing streak. Investors will be keenly observing the earnings report for insights into the company’s future prospects, particularly regarding its ability to navigate the challenges posed by labor negotiations and program delays.
