Strikes cause 38% profit fall at Boeing
Published: Oct 28, 2008
Global - Strikes, supply problems and delays with its new 787 airliner has resulted in a third quarter profit fall of 38% for Boeing, despite a tentative agreement with IAM.
The aviation giant said net profit fell 38%, to US$695 million, while earnings per share declined 33% to US$0.96, while net profit fell to US$695 million.
Jim McNerney, Boeing chief executive said, "Clearly, the results were affected by the machinists' strike, as well as by the supplier issues we face on the 787 programme."
Boeing's 27,000 machinists walked off the job on 6 September after contractual disputes, causing delays to both production and deliveries. The strike was organised by International Association of Machinists and Aerospace workers (IAM)
Third-quarter revenues fell 7% to US$15.3 billion, from US$16.5 billion in the same period last year.
The ongoing strike risks further delaying the launch of Boeing's new 787 Dreamliner commercial plane, for which 895 orders have been placed by 58 customers, said media sources.
According to a running union tally, the 47-day-old strike has cost more than US$4.6 billion to date. Previously, industry experts have estimated the strike will cost Boeing US$100 million per day.
McNerney said, "I'm hopeful we can find a way forward here, sooner rather than later; the economic environment is a reminder we have to respond quickly."
Due to labour strike, the first deliveries of the 787, initially planned for the first half of 2008, have been pushed back to the third quarter of 2009.
Other supply problems in the third quarter stemmed from a lack of finished kitchens for large aircraft.
In the latest development of the strike, IAM has reached a tentative agreement with Boeing on a new four-year contract covering the 27,000 employees in Washington, Oregon and Kansas currently on strike.
Boeing is addressing the union's issues on job security, pay and benefits by providing general wage increases every year and increases pension benefits.
Scott Carson, president and CEO of Boeing Commercial Airplanes said, "This is an outstanding offer that rewards employees for their contributions to our success while preserving our ability to compete."
The union is recommending that employees vote to ratify the contract.
By mutual agreement, details of the agreement will be released first by the union. If employees vote to approve the offer, it will end the strike by approximately 27,000 employees in Washington, Oregon and Kansas, said Boeing.
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