Douglas Posts Loss, Slashes Its Dividend : Aerospace: The $1-million loss was expected but the halving of the payout surprised many analysts.

ST. LOUIS —  McDonnell Douglas Corp. lost $1 million in the fourth quarter and slashed its stock dividend for the first time in recent memory, company officials said Tuesday.

The loss was expected, but the halving of the dividend to be paid to stockholders in April to 35 cents a share from 70.5 cents surprised some Wall Street analysts.

The cut will save the struggling aerospace giant $13.6 million during the first three months of the year.

“It’s a painful action for the company and shareholders, but hopefully it will convince everyone that there’s a commitment to change,” said Howard Rubel, an analyst with C. J. Lawrence in New York.

Company spokesman Andrew Wilson said the quarterly dividend at McDonnell hadn’t been cut for at least two decades “and maybe never.” He didn’t have records that would indicate when or if it had been cut before the 1970s.

The loss in the final quarter, which ended Dec. 31, was a result of a $350-million writeoff because of last month’s cancellation of the A-12 Avenger program by Defense Secretary Dick Cheney.

Cheney stopped the development of the plane, the next-generation, aircraft carrier-based jet for the Navy, because of cost overruns and delays.

The cancellation led to 5,600 layoffs at McDonnell Douglas, which already had laid off 15,000 employees in 1990 as part of a cost-cutting program.

The Pentagon wants to recover $1.9 billion from McDonnell Douglas and General Dynamics Corp., its partner in the A-12 program, because of the cancellation, but both companies are opposing that effort.

“If . . . the courts ultimately determine that the contract was properly terminated for default, McDonnell Douglas would have a substantial additional loss beyond the provision announced today,” the company said Tuesday in a prepared statement.

The loss reported Tuesday contrasted with a profit of $60 million for the year-ago period. Sales of $4.1 billion in the quarter were 3% lower than $4.2 billion for the like period in 1989.

The last quarterly loss at McDonnell Douglas occurred in the second quarter of 1989 when the company lost $48 million, Wilson said.

For the year, the company reported a profit of $306 million, up 40% from $219 million in 1989.

The 1990 figure was swollen by a one-time net gain of $99 million, after adding in a $376-million after-tax gain for some changes in the McDonnell pension fund and subtracting a $277-million after-tax writeoff for the A-12 and the C-17 programs.

Without that gain, profit for the year would have fallen 5%.

Sales for the year of $16.25 billion increased 11% from last year’s $14.58 billion.

Although there are still plenty of questions about the company, analysts said, it’s beginning to look like some of the problems that have plagued McDonnell Douglas for the past two years are being solved.

“As we look to 1991, there appears to be daylight on some of the nagging issues,” said Wolfgang Demisch, an analyst for UBS Securities in New York. “There are uncertainties to be sure, but things are not as bleak as they could be.”

McDonnell Douglas, based in St. Louis, makes the F-15 Eagle for the Air Force, the FA-18 jet or the Navy and the AV8B-Harrier for the Marines. It also makes Tomahawk cruise missiles for the Navy.

The company is also the world’s second biggest maker of commercial aircraft.

McDonnell Douglas stock closed at $40.125 Tuesday on the New York Stock Exchange, down from $40.75 Monday.