Few companies may be as miserable right now as Boeing (BA) .
The aerospace giant's shares have fallen 42% this year. The problems with its most popular plane, the Boeing 737 Max, don't seem to get fixed.
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Some 33,000 members of the International Association of Machinists have been striking for more than a month, with neither side doing much talking and no resolution coming soon.
As if that's not enough, the company preannounced its third-quarter earnings, projecting a loss of $9.9 billion. Cash flow is going to be negative $1 billion.
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The stock, down 42% so far in 2024, finished up nearly 5% on Friday to $151.02, but that was before this bombshell hit.
In the early release of third-quarter results, Boeing said it expected to report a loss of $9.97 a share for the quarter on revenue of $17.8 billion and operating cash flow of negative $1.3 billion.
The earnings release had been scheduled for Oct. 23.
In addition to the awful earnings projection, Boeing said it would deliver its newest version of the 777 jet, the 777-9, in 2026, a year later than expected.
It will stop making 767 freighters for the commercial market once 29 planes already under construction are finished. It will, however, continue to make a version of the plane that the Air Force uses as tankers.
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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 worldwide workforce of roughly 170,000. About 66,000 of that total are in the Seattle area.
Yes, it's the strike, but there's more to it
And why is Boeing doing this? Partly it's due to the strike, which may be costing the company $1 billion a month. Okay, a lot is due to the strike because somehow the company has to be kept afloat.
Multiple airlines use Boeing products exclusively, including Southwest Airlines (LUV) , Alaska Airlines (ALK) and Ireland's Ryanair (RYAAY) .
But the 737 Max aftermath continues to plague the company. On Jan. 5, 2024, an emergency-door plug blew out of an Alaska Airlines flight that was leaving Portland, Ore. The plug had been incorrectly installed at the factory.
That's on top of the 737 Max crashes in 2018 and 2019 that killed 346 people in Indonesia and Ethiopia. Those grounded the global fleet for 18 months. The problem was inadequately designed software.
Analysts will be weighing in on Boeing before stocks open for Monday's trading, and it might not be pretty. So far, none has issued any opinions on the shares.
The stock did well before the 2008-09 financial crisis, reaching as as high as $440 in 2019 before the Covid-19 pandemic nearly killed the travel business.
Couldn't Boeing just be a fling stock?
But if you think buying shares in a company as storied as Boeing looks like a steal, the answer is "not yet."
The stock will almost certainly see volatile trading this week. What you want to see is a bottom that holds. To get there probably requires these elements:
Peace between labor and the company. The company and new Chief Executive Kelly Ortberg and the IAM union need to find a way to settle the strike without bankrupting Boeing. Right now, the two sides aren't talking. The union rejected two Boeing contract offers; the latest called for 30% raises over four years. The union wants 40% raises, a restoration of the old pension plan, and better working conditions.
Guarantee of work 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, Wash., at a site that once built bombers for World War II.
Shoring up Boeing's capital position. The company might seek to raise new capital, with loans, a stock issue or both. Wells Fargo analysts recently predicted a $10 billion stock offering.
Peace with the regulators. Government regulators have wanted a reworking of the guts of some Boeing airliners. Boeing needs a solution that lets it do business and is strong enough to prevent crashes and blown door plugs.
Peace with all the people suing Boeing over the 2018 and 2019 crashes. One plaintiff is the niece of consumer advocate Ralph Nader, whose daughter was killed in the Ethiopian crash.
You don't need to have all the deals signed. What you do need are clear signs that resolution is on the way.
Strikes are common at Boeing
Boeing and its unions are used to tussling. There have been seven major strikes since 1948, when workers stayed off job 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 overly well since its 1997 takeover of rival McDonnell Douglas.
The new management vowed to run the company like a business, gutting pension plans, instituting layoffs and trying to push profits up to terrific levels.
But the constant warfare had one unexpected effect. It gave Airbus (EADSY) the dominant position in the commercial aircraft market. But Airbus shares are also weak, off 4.9% this year and down 22.5% from a March 27 peak of 171.6 euros.
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