Strike snarls Boeing future
SEATTLE — Negotiations that begin today to end a machinists union strike that has shut down commercial aircraft factories at Boeing Co. have gained gravity after the aviation giant reported a 38 percent drop in third-quarter earnings.
Boeing on Wednesday cited the 46-day worker strike as one of the reasons for the lost profits. Analysts estimate has cost roughly $100 million a day in deferred revenue and production delays on its highly anticipated next-generation passenger jet.
Just weeks before the quarter ended on Sept. 30, Boeing was forced to shut down commercial aircraft plants in Washington state, Oregon and Kansas when about 27,000 union workers walked off the job after rejecting a final labor contract offer.
The Chicago-based company reported net income of $695 million, or 96 cents per share for the third quarter, down from $1.11 billion, or $1.44 per share, a year earlier. The latest results include a 60-cents-per-share erosion in earnings as the strike and a shortage of key parts lowered Boeing’s airplane deliveries.
Without the strike, the company would have delivered 119 planes during the quarter, but instead delivered just 84 — 35 fewer than planned, Boeing said.
Quarterly revenue, meanwhile, dipped 7 percent to $15.29 billion.
Analysts polled by Thomson Reuters, on average, expected earnings of 98 cents per share on revenue of $14.61 billion. Analyst estimates typically exclude one-time items.
Boeing’s results "are likely to be something of a sideshow, with the overriding and unanswered concerns" being the strike and outlook for commercial airplane deliveries in 2009 and beyond, Banc of America Securities analyst Harry Nourse wrote in an investor note.
In a conference call following the earnings announcement, Boeing Chief Executive James McNerney said he had spoken with union leaders and was optimistic about the outcome of talks that are set to resume today with the help of federal mediators.
"I’m involved in the strike on a day-to-day basis," McNerney said. "There have been some informal discussions that I think have indicated a constructive head-set on both sides."
He would not identify the union leaders he spoke with direct payday loan cash advance.
It was the first word of direct communication between McNerney and the International Association of Machinists and Aerospace Workers since union members went on strike Sept. 6 after voting 80 percent to reject a contract offer and 87 percent to walk.
IAM President Tom Buffenbarger told The Associated Press by telephone he had not spoken with McNerney and had been told the CEO would not be at negotiations, which will take place at the Federal Mediation and Conciliation Service in Washington, D.C.
"That’s why I’m not optimistic" about a quick settlement, Buffenbarger said. "I’m not going to make a deal until McNerney signs off on that."
McNerney would not say he would come to the table.
IAM represents 25,000 painters, electricians, mechanics and other hourly workers in and around Seattle, 1,500 in Gresham, Ore., and about 750 in Wichita, Kan.
James A. Bell, Boeing’s chief financial officer, that at some unspecified point, the dispute could "start shutting down suppliers" and Boeing might lay off workers who are not on strike, although he added, "right now there are no plans to do that."
Earlier this month, two days of negotiations ended in failure. It was the first attempt to return to the bargaining table since the strike began Sept. 6.
The thorniest issue in the strike has been job security and outsourcing, with pay, retirement benefits and medical care the other key issues.
Mark Blondin, chief negotiator for the machinists union, said the union would continue to insist on hammering out job security and outsourcing language before discussing money matters.
The previous negotiation ended Oct. 13 after Boeing insisted on language to allow further outsourcing of parts and supply deliveries to the shop floor, casting doubt on the job future of 2,000 union workers after the next contract expires.
Blondin was noncommittal about the prospects for success.
"It’s hard to say. We hope we’re not going back to the table under false pretenses again," he said.
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