Boeing chief outlines plan to overhaul plane maker to prevent ‘serious performance lapses’
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Boeing’s new CEO, Kelly Ortberg, warned that the plane maker must reform its culture to end a years-long crisis that has shaken customer and investor confidence.
Ortberg told employees and investors that the planemaker was “at a crossroads” and that a “severe decline in operating efficiency” had led to an erosion of confidence, mounting debt and customer disappointment.
He wants to stabilize the business, improve aircraft manufacturing processes, and have executives “closely integrated with our business and the people who are doing the design and manufacturing of the products.” our”.
His comments came before Boeing’s third-quarter earnings call and hours before a meeting of the company’s 33,000 machinists in Washington. vote on whether to accept a proposed deal with the company to close The strike lasted six weeks.
The offer to increase salary by 35% within 4 years has improved compared to the company’s initial offer of 25%. It includes performance bonuses and better retirement benefits but does not restore the defined benefit pension that many workers are still angry about losing. a bitter war in 2014.
Ortberg said he was “very hopeful” the agreement would end the strike.
In contrast to his predecessor Dave Calhoun, Ortberg moved to Boeing’s manufacturing center in Washington from Florida after joining the company. “We need to be on the factory floors, in the back shops and in our engineering labs,” he said Wednesday. “We need to know what’s going on.”
The company also needs to develop a new plane “at the right time in the future,” he said, “but we have a lot of work to do before that,” including “restoring the balance sheet.” so we have a route to the next commercial plane.”
The US aerospace champion, which has been in crisis for the past five years, has burned through billions of dollars in cash this year as it tries to resolve quality and production problems after a crash. The door panel blew off a commercial flight in January. Ortberg said this month that the company would cut 17,000 jobs as it seeks to shrink its workforce “to align with our financial realities.”
The company reported Wednesday that it used $2 billion in free cash flow in the third quarter, compared with $310 million in the same period in 2023. It also said it is “actively managing liquidity.” when trying conserve its investment-grade credit rating.
Earlier this month, the company reported that it would take a $5 billion charge in the third quarter, while reporting a loss of $9.97 per share — nearly four times larger than in the third quarter of 2023 — on revenue of 17.8 billion USD.
The roughly $2.6 billion charge stems from delaying 777X deliveries by another year until 2026 – six years after airlines were initially promised their planes. Another $2 billion comes from losses on fixed-price defense contracts, and about $400 million comes from shutdowns and the company’s decision to discontinue 767 production in 2027, although they will continue produces a military version of the KC cargo plane – Refueling Tanker 46A.
The manufacturer had $10.5 billion in cash and marketable securities at the end of the third quarter, just above the threshold needed for operations. Boeing said last week it could selling shares worth up to 25 billion USD for more than three years but declined to comment further on the size or timing of the share capital increase.
