Striking machinists and a supplier bottleneck for customer-furnished galleys combined to crush Boeing's financial performance in the third quarter, as net income dropped 38% compared to the same period a year ago.
The Chicago-based airframer declined to provide an updated financial outlook until the ongoing strike by the International Association of Machinists concludes. Both parties are expected to enter a third round of talks on Thursday to resolve a strike that began on 6 September.
Overall sales in the third quarter declined 7% to $15.3 billion. But the strike contributed to a disproportionate decline in profits, which fell from $1.1 billion to $695 million during the third quarter.
The financial results reflected a 23% decline in commercial airplane deliveries, which fell from 109 in the same period a year ago to 84. In addition to the strike, deliveries for certain widebodies, including 777s, were also slowed by galley supplier Sell's production problems.
Boeing notes that "market demand remains strong, exceeding the available supply". However, the company also confirms that has made backstop financing commitments for 3% of the commercial airplanes backlog, mostly for 787s, as airline customers require an alternate source of financing to buy aircraft.
"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," said Jim McNerney, Boeing chairman, president and CEO.