Boeing Earnings Preview: Financial Struggles Deepen, Positive Labor Vote Offers Relief - Boeing (NYSE:BA)

Boeing Co. BA will report its third-quarter 2024 earnings on Wednesday, Oct. 23, ahead of the market opening.

The report comes as the company continues to grapple with significant financial pressures and a high-stakes labor vote that could end a 41-day strike.

The aerospace giant is expected to post an adjusted loss per share of $8.11, with revenues projected at $17.9 billion, as per Benzinga Pro estimates, underscoring the challenges Boeing faces across its commercial and defense segments.

Boeing Labor Vote Could End Strike

Union members from the International Association of Machinists and Aerospace Workers (IAM 751) are set to decide whether to accept a new labor deal that could bring an end to the work stoppage.

The strike, which began on September 13 after workers rejected a previous proposal, has halted production at key Boeing facilities and disrupted supply chains.

The latest labor proposal, announced on Oct. 19, offers wage increases of 35% over the contract's duration, which extends through September 2028.

Workers would also receive a one-time ratification bonus of $7,000. Boeing has agreed to contribute $5,000 to employees’ 401(k) plans, while also matching employee contributions up to 8% of their annual pay.

By the end of the contract, hourly wages for some of the most experienced workers could reach $70 per hour, equivalent to approximately $140,000 annually, before overtime and additional bonuses.

The proposal, however, does not include the defined benefit pension that union workers had been seeking.

If ratified, this deal could allow Boeing to resume normal operations, easing the financial strain the strike has placed on the company.

Analysts, including Ronald J. Epstein of Bank of America, are “optimistic about members voting in favor of the deal,” given the involvement of U.S. Secretary of Labor Julie Su in negotiations.

The deal only requires a simple majority for approval, but even a narrow victory would be a critical turning point for Boeing, enabling it to refocus on production and implement broader restructuring plans, including a potential $25 billion equity raise and a 10% workforce reduction.

“If union members do agree to end the strike — the supply chain, investors, and Boeing management will share a collective sigh of relief,” Bank of America wrote.

Financial Challenges And Heavy Charges in Q3

Boeing expects results to reflect the impact of significant charges stemming from delays in key programs.

As explained by Goldman Sachs analyst Noah Poponak, CFA, the company anticipates a $2.6 billion pre-tax charge on its 777X program due to updated assessments of certification and delivery timelines.

The first delivery of the 777-9 is now expected in 2026, while the 777-8 is pushed out to 2028. These delays, compounded by disruptions from the IAM strike, have weighed heavily on Boeing's cash flow and margins last quarter.

In addition, the company is facing a $0.4 billion charge related to the winding down of 767 freighter production, as Boeing transitions to producing only the 767-2C model for the KC-46A Tanker program starting in 2027.

In addition, 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 facing higher estimated costs on production contracts extending into 2026 and beyond, resulting in a $0.9 billion charge.

Meanwhile, the KC-46A program will see a $0.7 billion charge, partly due to the decision to end 767 freighter production and the impacts of the ongoing strike.

Stock Performance Under Pressure

Boeing's stock has had a rough year, down 38% year-to-date, positioning the company for its worst annual performance since 2008.

However, there have been some signs of recovery in October, with shares rising 5% so far this month, which could mark an end to a two-month losing streak.

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