Boeing/ machinists strike/ Kelly Ortberg/ Boeing earnings/ 737 Max production/ aerospace industry/ union vote/ Boeing financial losses/ Newslooks/ EVERETT/ Wash./ J. Mansour/ Morning Edition/ Boeing reported a $6 billion loss for the third quarter of 2024, impacted by a strike of 33,000 machinists and ongoing issues in its aircraft and defense divisions. With a critical vote looming on a new union contract, new CEO Kelly Ortberg faces immense pressure to resolve the strike and steer the company toward recovery.
Boeing’s $6 Billion Loss and Strike Complicate CEO’s Debut – Quick Look
- Boeing reports a $6 billion loss for Q3 2024, driven by work stoppages and program charges.
- New CEO Kelly Ortberg makes his first earnings call amid strike negotiations with 33,000 machinists.
- The strike has halted production of Boeing’s key 737 Max aircraft for over five weeks.
- A union vote on Boeing’s latest offer, including 35% wage increases and bonuses, is set for Wednesday.
- Boeing has not had a profitable year since 2018, raising concerns over its long-term viability.
Boeing Reports $6 Billion Loss Amid Machinists Strike, New CEO Steps In
Deep Look
Boeing is grappling with significant challenges as it reported a staggering $6 billion loss in the third quarter of 2024, a financial hit driven largely by a machinists’ strike that has brought aircraft production to a halt. The company’s losses also stem from charges tied to its commercial aircraft and defense programs, which have struggled to regain stability after years of turbulence.
Wednesday is shaping up to be a critical day for Boeing’s future. It marks the first earnings call for the company’s new CEO, Kelly Ortberg, and also the day that machinists in Washington state will vote on whether to end their strike—a vote that could either kickstart the company’s recovery or further stall its production lines.
The strike, now in its fifth week, involves 33,000 machinists and has crippled Boeing’s ability to manufacture new aircraft, including the essential 737 Max, a model that plays a crucial role in the company’s financial outlook. Without resolving the strike, Boeing cannot ramp up production, exacerbating its cash flow problems.
A Major Test for Boeing’s New CEO
Kelly Ortberg, who took over as Boeing’s CEO in August, is facing intense pressure just months into his tenure. During his first earnings call, Ortberg acknowledged the steep challenges Boeing faces. “The trust in our company has eroded. We’re saddled with too much debt. We’ve had serious lapses in our performance across the company, which have disappointed many of our customers,” Ortberg said, addressing the grim state of the company.
He also pointed out Boeing’s strengths, including a backlog of airplane orders valued at approximately $500 billion. However, turning that backlog into revenue depends on resuming production, which remains at a standstill until the strike ends. Ortberg has announced layoffs and a plan to raise cash to avoid a potential bankruptcy filing, but the company must also prove to regulators that it has fixed its safety culture before ramping up 737 Max production.
According to Tony Bancroft, portfolio manager at Gabelli Funds, a Boeing investor, Ortberg is likely laser-focused on ending the strike, calling it “the closest alligator to the boat.”
Financial Woes Deepen
Boeing reported a loss of $9.97 per share for the third quarter, with adjusted losses reaching $10.44 per share. This was slightly worse than the $10.34 per share loss predicted by analysts. The company’s revenue for the quarter stood at $17.84 billion, in line with Wall Street expectations, but the continued strike and unresolved production issues have cast a shadow over its financial future.
Boeing has not posted an annual profit since 2018, and the challenges it faces are compounded by supply chain disruptions, safety issues, and now labor disputes. The company’s shares dipped 1% in pre-market trading after the earnings announcement, reflecting investor concerns about its recovery trajectory.
Ortberg remained cautiously optimistic despite the dismal figures. “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.
Union Vote Looms Large
The day’s biggest news may come after markets close, when the International Association of Machinists and Aerospace Workers (IAM) will reveal the results of their vote on Boeing’s latest contract offer. The offer includes a 35% wage increase over four years, $7,000 in ratification bonuses, and continued performance-based bonuses that Boeing initially sought to eliminate. However, the company has held firm on not reinstating the traditional pension plan, which was frozen a decade ago—a key demand from the union.
Union members are divided on the offer. While some are eager to return to work with a substantial pay raise, others, like longtime employee Larry Best, believe the contract falls short. Best, who has worked at Boeing for 38 years, argues that the pension should have been the top priority and that the wage increase should be higher. “We all said [the pension] was our top priority… Now is the prime opportunity to get our pension back, and we all need to stay out and dig our heels in,” he said while picketing outside Boeing’s Everett factory.
Bartley Stokes Sr., another veteran Boeing employee, echoed these sentiments. “We’re out here in force, and we’re going to show our solidarity… They can do better,” Stokes said, encouraging his colleagues to vote against the contract.
The Road Ahead
Boeing’s future hangs in the balance as Ortberg works to rebuild trust with employees, customers, and regulators. The results of the union vote could determine whether Boeing can restart production and begin addressing its massive backlog of orders or if the strike will further delay its recovery efforts.
With the global aerospace industry watching closely, Boeing’s ability to navigate its labor issues, financial instability, and production delays will shape the company’s path forward in the coming months.
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