Boeing Profit Dives 38%

Labor strike and part supply programs caused decline

Boeing said on Oct. 22 third-quarter net profit plunged 38%, to $695 million, from a year ago due to an ongoing labor strike and parts supply problems.

Third-quarter revenues fell 7% to $15.3 billion, from $16.5 billion in the same period in 2007, "as labor strike and supplier production problems pushed airplane deliveries out of the quarter," Boeing said.

Boeing said the decline in earnings reflects "an ongoing machinists' strike and supplier production challenges on customer-furnished galleys for certain wide-body airplanes" which reduced third-quarter commercial airplane deliveries by approximately 35 units. The strike by machinists, begun on September 6, is estimated to be costing the company $100 million per day. According to a running union tally, the 47-day-old strike has cost Boeing more than $4.6 billion to date.The crippled production has raised concerns that Boeing will have to delay the launch of its new fuel-efficient 787 Dreamliner commercial plane.

During the July-September period, Boeing delivered 84 aircraft, compared with 125 in the second quarter and 115 in the first quarter.

The International Association of Machinists Local 751 says the union was maintaining its fight to keep its members' jobs from being outsourced. Boeing's 27,000 machinists represent 16% of the company's workforce.

The company and the union have agreed to resume federally mediated contract talks on Oct. 23.

"While the suspension of commercial airplane deliveries had a major impact on the quarter, we effectively executed the remainder of our business and kept our focus on the strong balance sheet we have built over the past few years," Jim McNerney, Boeing "That balance sheet, along with our broad-based, record $349 billion backlog, gives us exceptional flexibility for weathering an extended work stoppage and for adapting to circumstances that may arise from the global financial crisis and softening global economy."

Copyright Agence France-Presse, 2008

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