Boeing CEO to Provide Insights on Company's Future, Amidst Strike Vote by Workers

• On Wednesday morning, Boeing CEO Kelly Ortberg will address investors during his first quarterly call.
• On Wednesday, striking machinists who have halted most of Boeing's aircraft production will vote on a new contract.
• Boeing has announced plans to reduce its global workforce by 10%, affecting approximately 170,000 employees.

Now, with new CEO Kelly Ortberg at the helm, the troubled manufacturer has the opportunity to reveal his vision for the company, including the possibility of a labor agreement to end a strike and a streamlined future.

On Wednesday, Boeing's CEO will address his first earnings call while more than 32,000 striking machinists will vote on a new, improved contract proposal. The results of the labor vote are anticipated to be announced that night.

The new proposal, which only needs a simple majority vote, may pass, ending the more than five-week work stoppage that has halted most of Boeing's airplane production and added to its cash burn of about $8 billion in the first half of the year. Boeing last posted an annual profit in 2018.

Boeing executives, including Ortberg, provided insights into the company's future direction and production targets for the upcoming year during the call.

Narrowing businesses

Boeing appointed Ortberg, a seasoned aerospace expert and former CEO of Rockwell Collins, as its new leader in early August. His primary task was to steer the company back on course.

Boeing's new 737 Max plane experienced a terrifying mid-air door-plug blowout just as the company's leaders were hoping to regain the trust of regulators after two deadly crashes killed 346 people, the first of them six years ago this month.

Boeing's rebuilding year is being pushed back to 2025, and Ortberg has hinted at significant changes ahead, promising employees and the public greater focus at the 108-year-old company. Earlier this month, he announced that Boeing will cut 10% of its global workforce, which amounts to approximately 170,000 people.

"The leader advised employees to be realistic about the time it will take to achieve key milestones on the path to recovery and to focus their resources on performing and innovating in the areas that are core to who they are, rather than spreading themselves across too many efforts that can often result in underperformance and underinvestment."

At 10:30 a.m. ET Wednesday, investors will closely monitor Boeing's presentation by Ortberg to gain insights into the company's potential future size and which programs or assets may be at risk of being cut.

RBC analyst Ken Herbert stated in a note Sunday that he believes Boeing is likely to undergo more restructuring as the company considers divesting from certain parts of its portfolio and continues to prioritize improving its supply chain.

Raising cash

Earlier this month, Boeing announced that it will report a nearly $10-per-share loss for the third quarter and incur charges of approximately $5 billion in its defense and commercial businesses, which have been plagued with issues such as manufacturing defects on passenger planes, problems with a refueling tanker, and delays in the delivery of two 747s intended to serve as new Air Force One jets.

Boeing recently announced plans to raise up to $25 billion in debt or equity to increase its liquidity, following warnings from ratings agencies about the possibility of losing its investment-grade rating.

Mending ties with workers, stabilizing supply chain

The earnings call will be held before the union vote results are announced, which are expected to be released hours later. Meanwhile, S&P Global Ratings estimates that the ongoing strike is costing Boeing $1 billion per month.

Since the last contract was signed 16 years ago, the cost of living in the Seattle area has skyrocketed, and workers have complained that an earlier proposal did not do enough to address the issue. The union stated that the high-paying jobs at technology companies have flooded the area, driving up the cost of homes.

Boeing's "best and final" offer was rejected by the union, which has now presented a new proposal with 35% raises instead of the original 25%, along with a $7,000 signing bonus, additional 401(k) contributions, and other improvements.

Boeing stated that it remains dedicated to constructing its next airliner in the Puget Sound region, despite workers' concerns about the company's relocation of 787 Dreamliner production to a non-union facility in South Carolina.

Earlier this month, Julie Su, the Acting Labor Secretary, held talks with both sides in an attempt to reach an agreement.

The International Association of Machinists and Aerospace Workers District 751 announced on Saturday that, with the help of Acting U.S. Secretary of Labor Julie Su, they have received a negotiated proposal and resolution to end the strike, which is now worthy of their members' consideration.

President Joe Biden is being directly appealed to by the aerospace industry, which heavily depends on Boeing's success, to put an end to the strike.

Boeing supplier, which produces fuselages for the 737, announced that it would temporarily furlough 700 workers. However, if the strike continues, the company may have to resort to layoffs or more furloughs. Additionally, Boeing has reduced orders for suppliers on several programs to conserve cash.

"The Aerospace Industries Association wrote to Biden that the aerospace supply chain's vastness and interconnectedness mean the strike's consequences go beyond one company, affecting numerous suppliers nationwide. They urged Biden to keep communicating with all stakeholders to resolve the issue quickly before it worsens."