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Boeing’s new chief executive Kelly Ortberg warned that the plane maker must overhaul its culture to end a multiyear crisis that has shaken the confidence of customers and investors.
Ortberg told employees and investors that the plane maker was “at a crossroads” and that “serious performance lapses” had led to an erosion of trust, mounting debt and customer disappointment.
He wanted to stabilise the business, improve its aircraft production processes, and executives to be “closely integrated with our business and the people who are doing the design and production of our products”.
His comments came ahead of Boeing’s third-quarters earnings call and a few hours before the company’s 33,000 machinists in Washington cast ballots on whether to accept a proposed deal with the company that would end a nearly six-week long strike.
The offer to increase wages by 35 per cent over four years improves on the company’s original offer of 25 per cent. It includes a performance bonus and better retirement benefits but does not reinstate the defined benefit pension that many workers remain angry about losing following a bitter fight in 2014.
Ortberg said he was “very hopeful” the deal would end the strike.
In contrast to his predecessor Dave Calhoun, Ortberg moved to Boeing’s manufacturing hub 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 on Wednesday. “We need to know what’s going on.”
The company also needs to develop a new aeroplane “at the right time in the future”, he said, “but we have a lot of work to do before then”, including “restoring the balance sheet so that we do have a path to the next commercial aircraft”.
The US aerospace champion, which has been in crisis for much of the past five years, has eaten through billions in cash this year as it tries to address quality and manufacturing problems in the wake of a door panel blowing off a commercial flight in January. Ortberg said this month that the company would cut 17,000 jobs as it seeks to shrink the workforce “to align with our financial reality”.
The company reported on Wednesday that it had used $2bn in free cash during the third quarter, compared to $310mn for the same period in 2023. It also said it was “actively managing liquidity” as it tries to preserve its investment-grade credit rating.
The company reported earlier this month that it would take a $5bn charge during the third quarter, while reporting losses of $9.97 per share — nearly four times larger than the third quarter of 2023 — on $17.8bn in revenue.
About $2.6bn in charges stemmed from delaying deliveries of the 777X by another year until 2026 — six years after airlines were originally promised their planes. Another $2bn came from losses on fixed-price defence contracts, and about $400mn derived from the work stoppage and the company’s decision to stop making the 767 in 2027, though it will continue to make the military version of the freighter, the KC-46A refuelling tanker.
The manufacturer had $10.5bn in cash and marketable securities at the end of the third quarter, just above the threshold it requires for operations. Boeing said last week it could sell up to $25bn worth of stock over three years but has declined to comment further on the size or timing of the equity raise.