Key Points
- The company posted a $6 billion quarterly loss, driven by a worker strike and production halts of key aircraft models.
- CEO Kelly Ortberg stressed the need for a “fundamental culture change” and efforts to rebuild Boeing’s tarnished reputation.
- Boeing is expected to continue burning cash through late 2024 and into 2025, with the potential for a $15 billion equity raise.
- Boeing is downsizing its workforce and considering asset sales, aiming to focus on fewer projects with better execution.
Boeing CEO Kelly Ortberg outlined a cautious plan to steer the company towards recovery after posting a quarterly loss of $6 billion, largely attributed to a crippling strike. Boeing’s total losses for 2023 have surged to nearly $8 billion, exacerbated by halted production of its 737 MAX, 777, and 767 planes and ongoing struggles in its defense and space divisions. The company also continues to battle a quality crisis, highlighted by a mid-air panel blowout incident earlier this year.
During an earnings call, Ortberg emphasized the need for a “fundamental culture change” to improve performance across Boeing’s key programs, particularly in its defense sector and 737 MAX and 777 aircraft lines. He described Boeing as “at a crossroads,” acknowledging that its reputation has suffered significantly, and its once “iconic” status has been deeply tarnished.
Ortberg was named Boeing’s CEO in August, succeeding recent predecessors who were reluctant to admit the extent of the company’s issues. He clarified that significant efforts would be required to restore Boeing’s standing, describing the company as “a big ship that will take time to turn.” He focuses on stabilizing the company’s operations, improving customer satisfaction, and rebuilding trust.
Chief Financial Officer Brian West added that Boeing will likely continue burning cash throughout 2024 and into 2025, further straining the company’s financial outlook. Boeing’s shares dropped by 3.1% to $154.86 following the report. West also mentioned the possibility of a $15 billion equity raise to address the company’s balance sheet, although no specific timeline was provided.
Its long-term strategy also discussed Boeing’s workforce downsizing and potential asset sales. Ortberg believes in focusing on fewer projects but executing them with higher precision. This approach follows the company’s announcement of significant downsizing, as a strike involving 33,000 workers has disrupted production of its key aircraft models for over a month.
Although a new contract proposal for striking workers is up for a vote, resuming production of the 737 MAX and widebody planes will be challenging due to ongoing supply chain disruptions. Boeing must now convince furloughed suppliers to reinvest in its production plans, which Ortberg admitted will be “much harder to turn back on.”
Boeing reported a quarterly cash burn of $1.96 billion, with revenue falling 1% to $17.84 billion. Its commercial aircraft division recorded a $4 billion loss, while the defense and space business posted a $2.38 billion loss. Boeing Global Services, however, remains a relatively bright spot, though its growth slowed to 2% in the most recent quarter.
