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Boeing to cut 10,000 jobs after loss
2009-01-28
CHICAGO (AFP) - Boeing said Wednesday it would cut its workforce by 10,000 this year due to the uncertain economic outlook as the aerospace giant reported a loss of 56 million dollars in the fourth quarter. The loss was largely the result of a machinists' strike and costs to redesign its 747 freighter aircraft, but Boeing said it must tighten its belt in the face of a difficult global economy. "The global economy continues to weaken, and it's affecting air traffic and financing," chief executive Jim McNerney said after the aerospace giant released its quarterly results. "We must prepare the company, including being more aggressive in terms of productivity." He said the 10,000 cuts, around 6.25 percent of its global workforce, would be made "through attrition, retirement and layoffs," and included a figure announced earlier of 4,500 in the commercial aircraft division. The loss marked a sharp turnaround from a profit of 1.03 billion dollars in the same period a year earlier. Revenues in the quarter fell 27 percent to 12.7 billion dollars. The operating loss amounted to 205 million dollars. For the full year of 2008, profits fell 34 percent to 2.7 billion dollars and revenue fell eight percent to 60.9 billion. Boeing said its results were hit by the strike, the 747 charge, litigation costs and other charges. "The progress we made in many areas of Boeing during 2008 was outweighed by the impact of the strike and our performance on some key development programs," said McNerney in a statement. "Our imperative going forward is improving execution where it needs to be improved, maintaining strong performance across all our production programs, and preserving our financial strength to grow in these challenging economic times." Boeing's 27,000 machinists, representing 16 percent of the company's work force, walked off the job on September 6 in a dispute over new contracts, causing delays in production and deliveries. The 58-day strike ended November 2 but cost the firm billions of dollars. Boeing said the strike lopped off an estimated profit of 760 million dollars in the quarter, or 1.09 dollars per share, and revenues fell by 4.8 billion dollars as the strike pushed airplane deliveries out of the quarter. In 2008, Boeing fell behind its longtime European rival Airbus in orders and deliveries. Airbus took 777 orders and made 483 deliveries while Boeing reported 662 orders and 375 deliveries. But both firms see troubles ahead amid a deepening global economic slump. Boeing said it expects "continued growth" in both commercial aircraft and defense operations and a return to profits around the level of 2007. "The financial guidance continues to assume stable delivery levels for in-production commercial airplanes over the next several years, but also considers operational and market risks," the company said. Boeing expects deliveries of between 480 and 485 commercial airplanes in the current year. Peter Cohan at the consulting firm Peter Cohan & Associates said Boeing "disappointed analysts on its results and outlook." "It looks like things are going to get worse for Boeing before they get better," Cohan said. Still, Boeing shares shook off the news and rose 2.3 percent to 44.23 dollars. Boeing, which is counting on the much-delayed 787 Dreamliner jet for its future profits, said the program "made progress during the quarter despite the labor strike." It said US authorities approved the maintenance program for the new aircraft and the company "has now largely finished" replacing fasteners that caused one delay. The 787 program has won 895 net orders from 58 customers to date, which includes the recent removal from the books of one customer's order. Boeing reported an operating loss of 968 million dollars from its commercial airplane unit largely due to the strike, with revenues falling 48 percent in the past quarter. That was offset in past by operating earnings of 881 million dollars from its defense division, a 10 percent drop from a year earlier as revenues fell four percent.
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