Boeing Reports $6 Billion Quarterly Loss As Striking Workers Vote Whether To Accept Contract Offer

EVERETT, Washington – Boeing disclosed a third-quarter loss of more than $6 billion before focusing on whether striking manufacturing workers would accept a contract offer Wednesday, bringing an end to a protest that has halted airplane production for over six weeks.

Members of the International Association of Machinists and Aerospace Workers voted in union halls in Seattle and elsewhere on a deal that includes a 35% wage increase over four years. Their strike, which began in mid-September, has acted as an early test for new Boeing CEO Kelly Ortberg, who took over in August.

In his initial statements to investors, Ortberg stated that Boeing needed “a fundamental culture change,” and outlined his strategy for returning the business following years of significant losses and reputational harm.

Boeing Reports $6 Billion Quarterly Loss As Striking Workers Vote Whether To Accept Contract Offer

Ortberg stated in a statement to staff and during the results call that he wanted to “reset” management’s relationship with labor “so we don’t become so disconnected in the future.” He stated that firm leaders should spend more time on manufacturing floors to learn what is going on and “prevent the festering of issues and work better together to identify, fix, and understand root cause.”

Ortberg expressed optimism that the 33,000 striking machinists in the Pacific Northwest will vote to support the company’s most recent contract offer. Their union district was due to release the results on Wednesday night.

Ortberg, a Boeing outsider who previously led Rockwell Collins, a manufacturer of avionics and flight controls for commercial and military aircraft, believes Boeing is at a crossroads.

“Trust in our company has diminished. We have too much debt. We’ve had major failures in performance across the board, which have disappointed many of our customers,” he stated.

Ortberg did, however, underline the company’s strengths, which include a backlog of half-trillion-dollar airplane orders.

“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,” Mr. Musk said.

Ortberg earlier announced large-scale layoffs (about 17,000 individuals) and a proposal to acquire enough funds to avoid bankruptcy.

“He has a lot on his plate, but he is probably quite focused on completing this negotiation. “That’s the closest alligator to the boat,” said Tony Bancroft, portfolio manager at Gabelli Funds, a Boeing shareholder.

Boeing has not had a profitable year since 2018, and Wednesday’s results were the second-worst quarter in the company’s history. Boeing announced a $6.17 billion loss for the quarter ended September 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research predicted a loss of $10.34 per share.

Revenue was $17.84 billion, which matched Wall Street projections.

The corporation burned roughly $2 billion in cash in the quarter, weakening its balance sheet, which is burdened with $58 billion in debt. Brian West, the corporation’s Chief Financial Officer, stated that the corporation will continue to spend cash until 2025, but at a lesser pace.

Boeing shares slid 3% in afternoon trade.

The once-profitable company’s fortunes sank when two of its 737 Max jetliners crashed in October 2018 and March 2019, killing 346 people. A panel blew off an Alaska Airlines Max during a flight in January, reigniting safety worries.

Ortberg must persuade federal authorities that Boeing is improving its safety culture and is ready to ramp up production of the 737 Max, a critical step toward bringing in much-needed revenue. That cannot happen unless the striking workers return to their jobs.

Along with compensation rises, Boeing’s current contract offer includes $7,000 ratification incentives and the preservation of performance bonuses, which Boeing had hoped to abolish.

Boeing Reports $6 Billion Quarterly Loss As Striking Workers Vote Whether To Accept Contract Offer

Boeing resisted a union petition to revive a standard pension plan frozen a decade earlier. However, older workers would see a modest boost in their monthly pension payments.

At a picket line outside a Boeing factory in Everett, Washington, some strikers urged coworkers to reject the revised contract.

“The pension should have been the highest priority. We all agreed that it was our top goal, along with pay,” said Larry Best, a customer quality coordinator with 38 years at Boeing. “Now is the prime opportunity in a prime time to get our pension back, and we all need to stay out and dig our heels in.”

Best also believes that the salary raise should be 40% over three years to counteract a lengthy period of stagnating earnings, which are now mixed with increasing inflation.

“You can tell we had a great turnout today. “I’m pretty sure they don’t like the contract because that’s why I’m here,” said another picketer, Bartley Stokes Sr., who began working at Boeing in 1978. “We’re out here in force, and we’re going to show our solidarity and stick with our union brothers and sisters and vote this thing down because they can do better.”

SOURCE | AP