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Boeing posts loss, hurt by charges, labor strike

January 29, 2009|Peter Pae

With a global recession grounding air travel and demand for passenger jets, Boeing Co. said Wednesday that it would cut about 10,000 jobs, or 6% of its workforce.

But the job cuts, which include a previously announced elimination of 4,500 positions in its commercial aircraft-making business, is not expected to have a significant effect in Southern California, where Boeing is one of the largest private employers.

Boeing, based in Chicago, has about 30,000 workers in the region but most of them work in the company's military unit, which has been somewhat buffered from the economic downturn.

The job cuts were announced as Boeing reported losing $56 million in the fourth quarter compared with a profit of $1.03 billion a year earlier.

The losses stemmed from a strike that stopped aircraft production and led to 70 fewer aircraft deliveries in the quarter. The delayed deliveries reduced quarterly revenue by $4.3 billion. Earnings were also hurt by problems with developing a larger version of the 747 jumbo jet, called the 747-8, Boeing said. In all, quarterly revenue fell 27% to $12.68 billion from $17.48 billion a year earlier.

Still, the results were not as bad as some investors were expecting, and Boeing shares inched up 2 cents to $43.24.

Boeing Chief Executive Jim McNerney said in a teleconference call with analysts Wednesday that the company planned to reduce payroll "through a combination of attrition, retirements and layoffs."

"The global economy continues to weaken and is adversely affecting air traffic growth and financing," McNerney said.

The company has a total workforce of about 162,000, with about 68,000 in its commercial aircraft unit and nearly 70,000 in its military business. The remainder work in other aerospace-related subsidiaries.

Boeing officials said they weren't sure yet how many of the 10,000 would involve layoffs, but last fall McNerney told employees that he expected the workforce to fall 4% to 5% as the company forgoes filling positions left open by retirement or attrition. A Boeing official said many of the cuts were expected in back-office support work.

Although the outlook for its commercial aircraft business grew increasingly cloudy, Boeing's military business, which typically makes up about half the company's revenue, seemed unfazed by the economic downturn.

Boeing said defense revenue fell 4% to $8.04 billion, mainly because of timing of deliveries of its military aircraft and increased spending on research and development.

But new contracts awarded in the quarter bolstered the value its backlog of military orders to $45.3 billion from $41.8 billion last year.

In an e-mail, military unit President James Albaugh struck an upbeat note as he praised employees for the unit's 2008 results and said that he remained optimistic for 2009.


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