Boeing CEO Kelly Ortberg on Wednesday laid out a cautious path to rebuilding the struggling aircraft maker as a devastating strike balloons its quarterly loss to $6 billion. called for a “fundamental cultural change”.
The company is facing losses of nearly $8 billion this fiscal year, as production of its 737 MAX, 777 and 767 planes halted after the strike and poor performance in its defense and space division hurt its results.
Boeing Chief Financial Officer Brian West told analysts that he expects the company to continue using cash for all of 2025 and the final three months of 2024. Boeing stock closed 1.8% lower at $157.06.
Ortberg told CNBC on Wednesday that Boeing is currently reviewing its business and plans to sell some assets to reduce its workforce and focus on the company's major commercial aircraft manufacturing and core defense divisions. He said he may end up doing so.
“We need to right-size and become more efficient because we are overstaffed in anticipation of future business, and I think we need to continue to do that,” he said.
In a letter to employees, Mr. Ortberg said he would broadly stabilize Boeing, which is “at a crossroads” after poor performance, disappointing customers and eroding trust, as well as the defense business and the 737 MAX and 777. It emphasized the need to improve program performance.
“This is a big ship, and it's going to take some time to turn around, but when it does, it has the ability to be a great ship again,” Ortberg said ahead of his first earnings call as CEO. told company employees in a message that included prepared remarks.
West said the company has plans to address Boeing's balance sheet issues in the near term, including by issuing equity or equity-linked securities, but he did not specify a timeline. Reuters reported that the amount raised could be around $15 billion.
Ortberg's declaration of war comes as some 33,000 workers have been on strike for more than a month, hurting production of the company's best-selling 737 MAX, 767 and 777 widebody jets. It follows drastic plans for significant downsizing announced earlier this month.
A former Rockwell Collins executive who took the helm of the aircraft maker in August said he expected the new contract proposal, which was voted on by more striking workers on Wednesday, to be approved. However, analysts say ratification is not certain.
It's a pivotal day for the aircraft manufacturer, which was already struggling with the fallout from production limits on MAX planes imposed by regulators in the wake of the disastrous mid-air door panel explosion.
Ortberg said in his remarks that a recent meeting with company executives discussed changing the company's culture.
“We need to work better together to prevent the problem from worsening and to identify, fix, and understand the root causes,” Ortberg said. “We have already introduced more detailed business cadences to drive this across the organization, and this process of change is ongoing.”
But even if the strike ends, restarting production of the 737 MAX, 767 and 777 widebody aircraft will pose new challenges, given that parts of the supply chain are still struggling.
Boeing also needs to convince suppliers, who have announced furloughs and postponed investments in the past few weeks, to pivot and support production plans.
“It's much harder to turn this on than it is to turn it off,” Ortberg said of his company's factories and supply chain.
He noted that Boeing has “a lot of work to do” before developing a new plane.
“This includes stabilizing our business, improving the execution of our development programs, streamlining our portfolio to do what we do best, and securing a path to our next commercial aircraft. This includes restoring the balance sheet in order to
“Boeing has historically been reluctant to acknowledge that it has problems, let alone actually solve them, so he (Kelly's) We find the comments encouraging.”
Boeing on Wednesday reported a quarterly cash burn of $1.96 billion, compared with a year-ago cash burn of $310 million.
Quarterly sales decreased 1% to $17.84 billion.
The company's commercial aircraft business posted a loss of $4 billion, while its defense, space and security business posted a loss of $2.38 billion.
