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John Wolcott, Editor
Dave Clark, Assistant Editor
Published: Friday, January 30, 2009

Boeing announces $56 million fourth-quarter loss, total reduction of 10,000 jobs, double earlier figure

The global economic slump, along with a two-month strike by the Machinists’ union, is hitting the Boeing Co. hard.

On Jan. 28, Boeing CEO Jim McNerney announced the company lost $56 million in the last quarter of 2008.

Based on a year-to-year comparison, Boeing’s net income fell 34 percent to $2.7 billion in 2008 compared to 2007 revenue.

As a result, Boeing management has taken steps to shore up the company’s financial position, announcing total layoffs will reach at least 10,000 rather than the 4,500 job loss announced earlier.

The company noted that the two-month Machinists’ strike toward the end of 2008 caused the company to miss deliveries of 70 airliners worth $1.2 billion in revenue.

Layoffs company-wide will include the previously announced 4,500 jobs in the commercial airplane division and 800 defense program jobs at its plant in Wichita, Kansas.

McNerney also noted that orders for its 787 Dreamliner have been reduced from 910 to 895 and that he expects a “modest churn” of new orders and 787 cancellations in 2009 due to delays in the program.

Some airlines that have canceled or postponed their 787 orders have ordered 777 airliners to fill in until the 787 is available.

Overall, Boeing’s backlog of aircraft orders grew by 8 percent last year, reaching a record $352 billion. Revenues for the last quarter of the year were $12.7 billion.

“The progress we made in many areas of Boeing during 2008 was outweighed by the impact of the strike and our performance on some key development programs,” said Jim McNerney.

“Our imperative going forward is improving execution where it needs to be improved, maintaining strong performance across all our production programs, and preserving our financial strength to grow in these challenging economic times,” he said.

Boeing Commercial Airplanes (BCA) fourth-quarter revenues were $4.6 billion, 48 percent below the same period last year, driven by reduced deliveries due to the strike that affected production of all commercial airplane programs. BCA booked 44 gross orders during the quarter and 669 during the year.

The company expects deliveries of the 747-8 freighter to begin in the third quarter of 2010 and deliveries of the 747-8 Intercontinental passenger model to begin in the second quarter of 2011.

The 787 Dreamliner made progress during the quarter despite the labor strike. Key milestones included FAA approval of the scheduled maintenance program that defines the tasks and service intervals operators will use to maintain the 787, and a successful wing-box destruction test, a key step toward validating the structural integrity of the airplane.

As announced in December, the company expects first flight of the 787 to occur in the second quarter of 2009 and deliveries to begin in the first quarter of 2010. The 787 program has won 895 net orders from 58 customers to date, which includes the recent removal from the books of one customer’s order for airplanes that were scheduled for delivery late in the next decade.

Commercial Airplanes’ 2009 delivery outlook is between 480 and 485 airplanes and is sold out. BCA’s 2009 revenue is expected to grow to between $34 billion and $35 billion, accompanied by margins of approximately 10 percent.

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