Boeing’s new boss promises culture change as it reveals $6bn loss

Boeing has announced a $6.2 billion quarterly loss as 33,000 machinists strike and the planemaker’s new chief executive fights to restore its reputation.
Kelly Ortberg, 64, who took over as chief executive in August, called for a “fundamental culture change” at Boeing. He said trust in the company has eroded, it is “saddled with too much debt” and there have been “serious lapses” in its performance.
Ortberg and Boeing has been dealt a further blow after its factory workers voted to reject a contract offer and continue a more than five-week strike on Wednesday.
The vote was 64 per cent in opposition to the deal, which offered a 35 per cent rise in wages over four years. It is a major set-back for Ortberg who took the top job on a pledge to work more closely with factory workers than his predecessors.
He said the company was “at a crossroads” and needed to improve the operation of its 737 Max and 777 manufacturing lines and defence business.
“This is a big ship that will take some time to turn but when it does, it has the capacity to be great again,” Ortberg told employees before his first earnings call as chief executive.
Boeing announced plans earlier this month to cut 17,000 jobs, or 10 per cent of its global workforce.
Manufacturing of its commercial planes on the west coast of America has been hit by industrial action, which began on September 13 and is estimated to be costing the company $50 million a day. Union members were due to vote on a proposed new contract on Wednesday, including a 35 per cent four-year pay settlement.
Boeing was under financial strain before the strike. It was forced to slow manufacturing to improve safety after a door panel blew off a 737 Max jet during a flight in January. Boeing had already been tarnished by two 737 Max jet crashes that killed 346 passengers and crew in 2018 and 2019.
The $6.2 billion loss for the three months to the end of September is the largest since the $8.4 billion reported in the fourth quarter of 2020, when the pandemic caused a collapse in demand for new planes.
On Wednesday Boeing reported $57.7 billion of debt and a quarterly cash burn of $1.96 billion, compared with a cash burn of $310 million a year earlier. Quarterly revenue fell 1 per cent to $17.8 billion.
If the strike ends, Boeing faces challenges in immediately restarting production of its 737 Max as well as 767 and 777 models, due to the strains on its supply chain. It will have to convince suppliers who have announced furloughs and put off investments over the past few weeks to reverse course and support its production plans.
“Once we get back, we have the task of restarting the factories and the supply chain,” Ortberg said. “And it’s much harder to turn this on than it is to turn it off.”
Addressing concerns about the company culture, Ortberg said Boeing’s leaders need to be “on the factory floors, in the back shops and in our engineering labs”.
He said: “We need to know what’s going on, not only with our products, but with our people. And most importantly, we need to prevent the festering of issues and work better together to identify, fix and understand root cause.”
Ortberg, a former chief executive of the Boeing supplier Rockwell Collins, said there are “great opportunities ahead”, with an order backlog of around half a trillion dollars and a customer base “that want us and need us to succeed”.
He will have to decide whether to go ahead with a long-planned new midrange jetliner, dubbed the 797, with an estimated $50 billion development cost.
“Boeing is an airplane company and at the right time in the future we need to develop a new airplane,” he said. “But we have a lot of work to do before then.”
Shares in Boeing, down by more than a third since January, fell 1.8 per cent to close at $157.06 in New York on Wednesday.
Robert Stallard, analyst at Vertical Research Partners, said: “We view his [Ortberg’s] comments as encouraging, as Boeing has historically been averse to recognising that it has issues, let alone actually fixing them.”