Boeing
suffered a staggering $6.2 billion loss in third-quarter loss, primarily due to labor disputes and expenses associated with its commercial and defense aircraft programs.
The aviation major faces a crucial day on Wednesday, as it introduces its new CEO, Kelly Ortberg, during his inaugural earnings call and awaits the outcome of a
machinists’ strike
that has crumbled
aircraft production
for over a month.
Boeing has not registered profit since 2018, and the situation is expected to worsen before improving. The company reported a loss of $9.97 per share for the period ending September 30, with an adjusted loss of $10.44 per share, aligning with analysts’ expectations polled by Zacks Investment Research. Revenue amounted to $17.84 billion, matching Wall Street estimates. Company shares experienced a slight decline of 1% in pre-market trading.
Ortberg acknowledged that restoring Boeing to its former status will take time. “It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” he said.
Ortberg, who assumed the CEO role in August, admitted the erosion of trust in the company, excessive debt, and significant performance shortcomings that have left many customers dissatisfied. However, he also highlighted Boeing’s strengths, such as its substantial backlog of airplane orders worth half a trillion dollars.
He has already initiated large-scale layoffs and come up with a plan to raise sufficient funds to prevent bankruptcy. He must also persuade federal regulators that Boeing is addressing its safety culture and is prepared to ramp up production of the 737 Max, a critical step in generating much-needed revenue.
However, Boeing cannot manufacture any new 737s until it resolves the five-week-old strike by 33,000 machinists, which has halted production at assembly plants in the Seattle region.
Tony Bancroft, a portfolio manager at Gabelli Funds and a Boeing investor, said that Ortberg “got a lot on his plate, but he probably is laser-focused on getting this negotiation completed. That’s the closest alligator to the boat.”
Meanwhile, the most significant development is expected to unfold on Wednesday evening when the International Association of Machinists and Aerospace Workers announces the results of a vote by striking workers on whether to accept Boeing’s offer and return to work.
The proposal includes a 35% pay increase over a four-year period, a $7,000 ratification bonus, and the preservation of performance bonuses that Boeing had initially sought to remove.
The company has remained resolute in its opposition to the union’s demand for the reinstatement of the traditional pension plan, which was frozen ten years ago. Nonetheless, older employees would receive a modest increase in their monthly pension payments.
At the picket line outside Boeing’s Everett factory in Washington, some machinists are encouraging their colleagues to reject the offer.
“The pension should have been the top priority. We all said that was our top priority, along with wage. Now is the prime opportunity in a prime time to get our pension back, and we all need to stay out and dig our heels in,” said Larry Best, a customer-quality coordinator with 38 years of experience at Boeing.
He also believes that the pay increase should be 40% over three years to compensate for the prolonged period of wage stagnation, which is now compounded by high inflation.
Bartley Stokes Sr, who began working at Boeing in 1978, also shared his perspective. He said, “You can see we got a great turnout today. I’m pretty sure that they don’t like the contract because that’s why I’m here. We’re out here in force, and we’re going to show our solidarity and stick with our union brothers and sisters and vote this thing down because they can do better.”
