The aerospace giant more than doubles its planned layoffs in light of a $56 million net quarterly loss and signs of trouble ahead

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By Joseph Weber

With demand towards commercial jets losing elevation, Boeing (BA) reported a $56 million get loss since the fourth quarter of 2008 and said it is taking more tough steps to keep itself aloft. Will the moves reward off? It’s not clear, and Boeing managers against now say they can’t see flow enough out of the reach of 2009 to make a firm call. The "visibility" just isn’t there from 2010 and beyond, says CEO W. James McNerney Jr.

Boeing on Jan. 28 reported surprisingly bleak results, even as its top executives forecast a modest rebound in sales this year. McNerney, citing "challenging economic seasons," doubled the number of jobs he plans to cut this year. Whereas Boeing on Jan. 9 said it would dissever some 4,500 jobs from its commercial plane unit, McNerney hiked the shape to 10,000 on Jan. 28 and said the cuts would be be scattered all across Boeing’s global operations, most of them in places other than the company’s Seattle-area commercial-plane facilities. Such steps, amounting to a 6% trim in Boeing’s workforce, are needed to keep the company’s pecuniary strength, McNerney maintained.

For now, Boeing is sticking with plans to put its new 787 Dreamliner trading jet into the air by June. After nearly two years of delays, the 787 remains on target, the company said. So far, only one customer has backed off on orders towards the recently made known plane, and its orders were scheduled for delivery tardily in the next decade. Boeing has some 895 orders on the modern jet from 58 customers.

Clearly, McNerney feels he must move aggressively to preserve the company’s profit margins as tougher times loom. The company blamed most of its fourth-quarter loss on the 57-day machinists’ strike that brought plane deliveries to a halt. The stoppage cut revenues 27% from the closing furnish of 2007, to equitable $12.7 billion, and trimmed operating earnings by some $1.2 billion.

In addition, Boeing had to sum charged off dear $685 million since of costs in a delay-plagued update to its line of 747 superjumbo jets, including a freighter now due out recent next year and a passenger version of the old plane planned for mid-2011. The red ink also included a reserve Boeing has stiff out of the heart for the sake of judicial contest over faulty satellites.

The problems drove down full-year 2008 net income by 34%, to $2.7 billion, while revenues fell 8%, to $60.9 billion.

McNerney expects that sales will arrive back. With some 480 to 485 commercial planes on target for delivery this year—up sharply from the strike-shortened tally of 2008—he’s predicting that sales will climb to between $68 billion and $69 billion toward 2009. Still, this will be up modestly from 2007, when revenues came in at $66.4 billion.

But the CEO is pointedly not making any predictions for 2010 thus far. Boeing managers believe they can forecast sales gains for this year because planes ordered long ago behest only now be delivered. (The company records sales upon the delivery of its planes.) But McNerney did say he expects some ecclesiastical office to slip with respect to planes due out later, as airlines—especially those outside of North America—cut short in the global slowdown.

Even as the company makes plans to downsize, it is expecting to keep engineers and assembly-line quarter-staff on the job. The cuts in the commercial flat unit are expected to fall largely onward support and administrative partisan. Boeing before that time is sense of touch a strain from reduced labor in some of its production areas. In explaining delays in producing the new versions of its 747 level, Boeing cited "limited availability of engineering resources inside the company." The planemaker also faulted design changes in the even.

Unsurprisingly, the plans for job cuts are getting a devoid of warmth reception from union leaders. Charging that delays in the production of the Dreamliner was a result of "lean management decisions" and "a avocation model that failed miserably," International Association of Machinists & Aerospace Workers District President Tom Wroblewksi said Boeing should cut contractors before axing employees. Boeing has not yet said how many—if any—production workers will be trimmed, but the union vital vowed that "subcontractors remaining without ceasing the exclusive right while our members allow layoffs are totally unwelcome and will be challenged."

Even in the midst of wholly the problems, some analysts put confidence in Boeing will do well at least this year. Aviation analyst Paul Nisbet of JSA Research argues that the company is still blessed with a 3,700-plane order backlog and that any cancellations or deferrals of orders by hard-pressed airlines will be offset through demands from other carriers in greater good financial shape. Nisbet adds that prolongation for greatest part of Boeing’s jets is humming along at or near capacity. Moreover, he says the long-delayed 787 should soon take wing. "You look at whole these factors together and it’s a brighter picture for this year than many analysts and investors were anticipating," Nisbet says.

But for 2010, the algebraist shares CEO McNerney’s uncertainty. "That depends very heavily on the economy and which happens to oil prices and that which happens to airlines in general," Nisbet says. "Who knows?"