Boeing reported a loss of more than $6 billion in the third quarter and immediately turned its attention to union workers who will vote Wednesday on whether to accept the company’s contract or continue their bitter strike, which has ended for nearly six weeks.
New CEO Kelly Ortberg has extended his turnaround plan for Boeing after years of heavy losses and damage to its reputation.
In a speech he plans to deliver Wednesday to investors, Ortberg said Boeing needs “a fundamental culture change in the company.” To achieve that, he said, company leaders need to spend more time on the factory floor to know what’s going on and “prevent problems from escalating and work better together to identify, fix, and understand the root cause.”
Ortberg also said he wants to “reset” the relationship between management and labor “so that we don’t get cut off in the future.” He expressed his hope that the workers will vote to ratify the company’s latest contract and end their strike.
“It will take time to restore Boeing to its former legacy, but with the right focus and culture, we can become an iconic company and aerospace leader again,” he said.
The strike is an early test for Ortberg, a Boeing outsider who became CEO in August.
Ortberg has already announced major layoffs and a plan to raise enough cash to avoid a bankruptcy filing. He needs to convince federal regulators that Boeing is fixing its safety culture and is ready to ramp up production of the 737 Max — a key step to bring in much-needed cash.
Boeing cannot produce new 737s, however, until it ends a strike by 33,000 workers that has shut down assembly plants in the Seattle area.
Ortberg “has a lot on his plate, but he may be focused on finishing this conversation. That’s an alligator too close to the boat,” said Tony Bancroft, portfolio manager at Gabelli Funds, a Boeing investor.
Boeing said Wednesday it lost $6.17 billion in the period ended Sept. 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research were looking for a loss of $10.34 per share.
Revenue came in at $17.84 billion, in line with Wall Street estimates.
Stocks were lower before the opening bell.
Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represent the second worst quarter in Boeing’s history. The long-profit carrier’s fortunes soured after two of its 737 Max planes crashed in October 2018 and March 2019, killing 346 people. Safety concerns were renewed when the crew blew up the Max during an Alaska Airlines flight in January.
Ortberg said Boeing is at a crossroads.
“The trust of our company is gone. We are burdened with too much debt. “We had a big mistake in our performance throughout the company, which disappointed many of our customers,” said the new CEO. But he also highlighted the company’s strengths, including a backlog of aircraft orders worth half a billion dollars.
Investors were looking for Ortberg to show calm, determination and urgency when he presided over an earnings call for the first time since he took over Rockwell Collins, a maker of airplanes and flight controllers for the airline and military, a decade ago.
The big news of the day, however, may come Wednesday evening, when the International Association of Machinists and Aerospace Workers reveals whether striking workers are ready to return to their jobs.
They will vote at union halls in the Seattle area and elsewhere on Boeing’s offer that includes a 35% pay raise over four years, $7,000 in confirmation bonuses, and retention of performance bonuses that Boeing wanted to eliminate.
Boeing has remained steadfast in its opposition to the union’s request to restore the traditional pension plan that was suspended a decade ago. However, older workers will get a slight increase in their monthly pension.
In a picket line outside the Boeing factory in Everett, Washington, some mechanics encouraged their colleagues to vote for the number.
“Pension should have been the priority. “We all said that was our priority, along with wages,” said Larry Best, a 38-year-old customer quality consultant at Boeing. “Now is the perfect opportunity to get our pensions back, and we all need to stay out and hold our heels.”
Best also thinks that the salary increase should be 40% over three years to reduce stagnant wages, now combined with high inflation.
“You can see that we were very successful today. I’m sure they don’t like this contract because that’s why I’m here,” said another worker, Bartley Stokes Sr., who started working at Boeing in 1978. “We’re getting out of here by force, and we’re going to show our solidarity and stick with our brothers and sisters in the unions and vote for this thing because they can do better.”
-David Koenig and Manuel Valdes, The Associated Press
Source link
