Boeing to cut 747-8 production, take $569M charge
Boeing announced Thursday it will take a $569 million after-tax charge in its fourth-quarter results as it scales back production of its 747-8.
The airplane manufacturer in September plans to cut 747-8 production to one airplane every two months from one every month previously. Sluggishness in the air cargo market drove the decision, Boeing said.
"Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 Freighter," said Ray Conner, Boeing's vice chairman, in a statement.
The company plans to report full quarterly results Jan. 27 before the opening bell. Before the charge analysts expected Boeing to report earnings of $2.13 a share on $23.59 billion in revenue for the quarter, according to a consensus estimate from Thomson Reuters.
The after-tax charge comes to 84 cents per share. It will not affect Boeing's 2015 revenue or cash flow.
The company stressed that it did not see weakness in air passenger travel. However, it cited a 1.2 percent year-over-year contraction in air freight traffic in November.
"We are closely monitoring the air cargo market as we work to win additional orders to support ongoing future production," said Greg Smith, Boeing's chief financial officer.
The company's shares fell more than 1 percent in after-hours trading Thursday.