Boeing CEO aims for a 'leaner' future amid rising crisis costs

• Since becoming Boeing's CEO in August, Kelly Ortberg stated that the company should prioritize its core business before his upcoming earnings call.
• On Wednesday, Boeing's over 32,000 striking machinists will vote on a new contract proposal that may end the more than five-week work stoppage.
• The company is facing a significant financial loss and is considering raising billions in funding through equity or debt after releasing preliminary results.

Boeing's new CEO, Kelly Ortberg, has stated that the company must become more efficient and enhance its quality, which he outlined in a vision for the struggling aircraft manufacturer prior to his first quarterly call with analysts on Wednesday. Meanwhile, thousands of striking Boeing machinists will decide on a new labor agreement, and Ortberg expressed optimism about reaching a deal.

Earlier this month, Boeing disclosed its preliminary third-quarter results, revealing revenue of $17.8 billion, which is only a 1.9% decrease from the previous year. Additionally, the company reported a loss of $9.97 per share and a cash outflow of $1.3 billion. Despite this, Boeing ended the third quarter with $10.5 billion in cash and marketable securities.

Based on a survey of analysts by LSEG, the company's reported results differed from Wall Street's expectations.

• The adjusted loss of $10.44 may not be as high as the expected loss of $10.52 by LSEG.
• Revenue: $17.84 billion vs $17.82 billion expected

Boeing appointed Ortberg, a former CEO of Rockwell Collins, as its new CEO in August, with the responsibility of repairing the company's reputation and resolving quality issues with aircraft and other programs. However, a door plug blew out on an Alaska Airlines flight in January, just minutes after takeoff on a 737 Max 9, causing a near-catastrophe that reignited safety concerns among regulators and customers.

"He emphasized the importance of being aware not only of product developments but also of employee concerns during his prepared remarks before the earnings call on Wednesday. He stressed the need to address and resolve any issues that may arise and to collaborate more effectively to identify, address, and determine the root cause of problems."

Boeing is expected to face questions on the call about which units or projects the company will consider shedding, as Ortberg earlier this month announced that the company will slash 10% of its global workforce of about 170,000 people, hinting at a slimmer manufacturer.

Ortberg stated in his prepared remarks that it is necessary to reevaluate priorities and streamline the organization for greater focus.

The main challenge for Boeing this week is resolving a costly labor strike that has slowed down its factories in the Seattle area, where most of its aircraft are manufactured. On September 13, over 32,000 machinists went on strike after rejecting a contract that included 25% raises and other changes. On Saturday, a new proposal was presented, which included 35% raises over four years, a higher signing bonus and 401(k) contributions, and other improvements.

According to S&P Global Ratings, the strike at Boeing costs the company $1 billion per month, and a quick resolution is necessary for the aerospace industry's fragile supply chain, which is already experiencing furloughs.

Ortberg stated that the company has been intensely working to discover a solution that satisfies both the company's requirements and the needs of its employees.

Boeing has agreed to construct its next aircraft in the Pacific Northwest, which has been a contentious issue for unionized machinists since the company shifted its 787 Dreamliner production to a non-union facility in South Carolina.

"We need to develop a new airplane in the future, but there is a lot of work to be done before that time," Ortberg stated on Wednesday.

The labor vote results are expected late Wednesday night, and analysts are optimistic that the deal will pass.