Last fall, Boeing's 27,000 machinists went on strike for 52 days. Not surprisingly, this put a crimp in Boeing's ability to meet its production schedule. Until today, it was hard to know just how much damage that strike did. Now we know that Boeing's 2008 aircraft deliveries dropped 15% thanks to the strike. But big questions remain for investors.
The numbers are not pretty. Boeing delivered 375 commercial planes in 2008, 15% fewer than the 441 it delivered in 2007. Prior to the strike, in early 2008, expectations for the year ranged from 475 to 480. But Boeing fell far short. Boeing
Meanwhile, Boeing's 787 Dreamliner -- which accounts for 900 aircraft in that backlog -- is about two years behind schedule. The 787's delays are taking engineers away from other projects, such as the one to update its 747 jumbo jet, which has now been delayed nine months. Despite all this bad news, we still don't know how much these delays will cost Boeing in lost revenues and profits. And it remains to be seen whether the fourth 787 production delay will be its last.
Boeing stock trades at a P/E of 8 yet its 2009 earnings are forecast to grow 30%. Either the stock is a screaming buy at current levels or that 2009 forecast is going to take a big hit.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. Portfolio published his eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing on December 26, 2008. He has no financial interest in Boeing securities.
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Reader Comments (Page 1 of 1)
1-09-2009 @ 12:56AM
nick said...
Cohan can you tell me why the unions the unions get a free pass for screwing up the profits of a good company like Boeing? Everytime the union slugs go on strike the company takes it in the shorts and then when they get in trouble they want the tax payer to bail them out.