11:22 AM EDT, 10/25/2024 (MT Newswires) -- Boeing's ( BA ) fortunes depend on resolving a labor dispute with striking workers with the world's largest aircraft manufacturer expected to continue burning cash in the fourth quarter before rebounding in the second half of 2025.

The Arlington, Virginia-based company on Wednesday reported a Q3 net loss of $6.17 billion, free cash flow loss of $1.96 billion and an operating cash flow loss of $1.35 billion, partly reflecting "unfavorable working capital timing," including the impact of a strike by the International Association of Machinists and Aerospace Worker.

Management expects fourth-quarter free cash flow to come in around the second-quarter loss of $4.33 billion before becoming "significantly better" in late 2025,

Chief Financial Officer Brian West said on the earnings call.

"We expect the first half [of 2025] to be a cash usage and the second half to turn positive and then build real momentum as we exit the year and return to more stable production rates," West said.

The timing depends on how quickly the strike ends, Jeff Windau, a senior equity analyst at Edward Jones, said in an interview with MT Newswires.

"They were talking negative free cash flow in the first half, but that might start to bleed into the second half of the year if they don't come to a resolution in a relatively expedient time period," Windau said.

Boeing ( BA ) is making a general forecast for cash flow, "and we know that the first thing we need to do is get back to work in the factory," West said.

Company executives said they had hoped their latest proposal would lead to a labor accord, ending the six-week strike.

Boeing's ( BA ) latest offer this week included a 35% wage increase over four years, up from 25% previously; a $7,000 ratification bonus for all employees; and an increase of the 401(k) match to 100% from 75%, as well as a one-time contribution of $5,000 to all employee accounts.

The new proposal failed to mention a revival of a pension program, a point of contention for the strikers, Chris Olin, an equity analyst at Northcoast Research, said in an interview.

IAM International President Brian Bryant said Wednesday that all 600,000 union members "stand with our District 751 and W24 membership." The strike will continue, and the union "plans to immediately send new dates for further negotiations," he said.

The work stoppage is taking a heavy toll on Boeing's ( BA ) supply-chain companies as orders for their materials and parts have dried up, Olin of Northcoast Research said.

"It's a number of big and small aerospace players without business, strapped, shut down," Olin said.

After the strike ends, it may take a long time for companies to ramp up to full production, which will push the aircraft maker's projected production numbers out further, Olin said.

Kelly Ortberg, Boeing's ( BA ) new chief executive officer, said on the earnings call that the company has been in constant contact with its suppliers, and he's not expecting a "major issue" from the strike.

"It's not like we've been out on strike for a long period such that someone's decommissioned a factory or changed a foundry or shifted a balance of their workforce," Ortberg said.

The suppliers have varying levels of financial constraints and will face greater pressure if labor negotiations drag on, Windau of Edward Jones said. "It makes for another dynamic you have to consider: if someone goes out of business or can't fulfill obligations because of their financial limitations."

Boeing ( BA ) might move to help some suppliers by making prepayments or allowing some financial concessions to keep them healthy, taking steps that may be an additional drain on the aircraft maker's cash flow, Windau said.

Boeing ( BA ) ended the third quarter with $10.5 billion in cash and marketable securities, staying above the $10 billion needed to run the company, according to Bloomberg analysts.

Last week, Boeing ( BA ) entered into a new $10 billion short-term credit facility and filed a mixed shelf offering that may raise as much as $25 billion. Prior to the latest union vote, analysts generally expected the company would need to raise about $10 billion to $15 billion, Windau said. Now, the strike may force Boeing ( BA ) to come closer to pursuing the full $25 billion, according to some analysts, while others predict the company may be compelled to act early.

"I don't know if it increases the size, but it may push them into the market sooner than they want to go," Olin of Northcoast Research said. "In a perfect world, they want the strike settled, and that way, the stock price is higher when they go to get the funds."

Reaching an agreement with the union is the first step in a long, complex process to revitalize the company, Ortberg said on his first earnings call since taking over in early August. Leadership must change the company's culture, stabilize the business, improve execution and build for a new future, including developing a new airplane, he said.

"We're clearly at a crossroads," Ortberg said. "The trust in our company has eroded, we're saddled with too much debt, we've had serious lapses in our performance across the company, which has disappointed many customers.

"By the same token, we have great opportunities ahead," the CEO said.

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