Few companies can be as miserable right now as Boeing (bachelor of arts) .
Shares of the aerospace giant have fallen 42% this year. The problems with its most popular plane, the Boeing 737 Max, do not seem to be solved.
Don't miss the move: subscribe to TheStreet's free daily newsletter
Some 33,000 members of the International Association of Machinists have been on strike for more than a month, with little talk from either side and no resolution in the near future.
As if that weren't enough, the company previously announced its third-quarter earnings, projecting a loss of $9.9 billion. Cash flow will be negative $1 billion.
Related: S&P 500 Bull Run Looks Difficult
The stock, which is down 42% so far in 2024, ended up nearly 5% on Friday at $151.02, but that was before this bombshell went off.
In the early release of third-quarter results, Boeing said it expected to report a loss of $9.97 per share for the quarter on revenue of $17.8 billion and negative operating cash flow of $1.3 billion.
The publication of results was scheduled for October 23.
In addition to the dire profit projection, Boeing said it would deliver its newest version of the 777 plane, the 777-9, in 2026, a year later than expected.
It will stop manufacturing 767 cargo planes for the commercial market once the 29 planes already under construction are completed. However, it will continue to make a version of the plane that the Air Force uses as tankers.
More about Boeing
- Boeing just won't fly with me
- Veteran Analyst Slams Boeing Stock After Mistakes
- Analyst adjusts Boeing stock price target due to strike impact
The results will include $3 billion in charges to earnings from its commercial business and a $2 billion charge to earnings from its military business.
And it plans to lay off 10% of its global workforce of about 170,000 people. About 66,000 of that total are in the Seattle area.
Yes, it is the strike, but there is more
And why is Boeing doing this? Part of it is due to the strike, which may be costing the company a billion dollars a month. Well, a lot of it is due to the strike because somehow the company has to stay afloat.
Several airlines use Boeing products exclusively, including Southwest Airlines (LUV) Alaska Airlines (ALK) and the Irish Ryanair (RYAAY) .
But the consequences of the 737 Max continue to affect the company. On January 5, 2024, an emergency door plug came loose on an Alaska Airlines flight departing Portland, Oregon. The plug had been installed incorrectly at the factory.
This comes on top of the 737 Max crashes in 2018 and 2019 that killed 346 people in Indonesia and Ethiopia. Those grounded the world fleet for 18 months. The problem was poorly designed software.
Analysts will weigh in on Boeing before shares open for trading on Monday, and it may not be pretty. So far, no one has issued an opinion on the shares.
The stock did well before the 2008-09 financial crisis, reaching as high as $440 in 2019 before the Covid-19 pandemic nearly wiped out the travel business.
Couldn't Boeing just be an action adventure?
But if you think buying shares of a company with as much history as Boeing seems like a bargain, the answer is “not yet.”
The stock will almost certainly see volatile trading this week. What you want to see is a fund that will hold up. To get there you will probably require these items:
Peace between work and company. The company and new CEO Kelly Ortberg and the IAM union must find a way to resolve the strike without bankrupting Boeing. At this time, the two sides are not talking. The union rejected two contract offers from Boeing; the last one called for increases of 30% in four years. The union wants 40% raises, the restoration of the old pension plan and better working conditions.
Job guarantee in the Puget Sound region. Boeing moved its 787 Dreamliner production to Charleston, S.C., in part to get away from unions. It builds the 737 almost exclusively in Renton, Washington, on a site where bombers were once built for World War II.
Strengthen Boeing's capital position. The company could try to raise new capital, through loans, a share issue, or both. Wells Fargo analysts recently predicted a $10 billion stock offering.
Peace with the regulators. Government regulators have wanted to rework the interior of some Boeing planes. Boeing needs a solution that allows it to do business and is strong enough to prevent accidents and broken door plugs.
Peace to all the people who sued Boeing for the 2018 and 2019 accidents. One plaintiff is the niece of consumer advocate Ralph Nader, whose daughter died in the crash in Ethiopia.
It is not necessary to have all agreements signed. What is needed are clear signs that resolution is on the way.
Strikes are common at Boeing
Boeing and its unions are used to fighting. There have been seven major strikes since 1948, when workers were out of work for 140 days. The most recent strike, in 2008, lasted 57 days.
Boeing, a component of the Dow Jones Industrial Average since 1987, has not fared very well since it acquired rival McDonnell Douglas in 1997.
The new management promised to run the company like a business, dismantling pension plans, instituting layoffs and trying to raise profits to fantastic levels.
But the constant war had an unexpected effect. He gave Airbus (EASY) the dominant position in the commercial aircraft market. But Airbus shares are also weak, down 4.9% this year and down 22.5% from a March 27 high of €171.6.
Related: Veteran Fund Manager Sees a World of Hurt for stocks
