Boeing Faces $6 Billion Loss as Striking Workers’ Vote Looms

Boeing is bracing for a challenging week while it faces a potential $6 billion third quarter loss, the introduction of a new CEO, and a crucial vote that could end a prolonged Machinists’ strike.

The strike, which has halted production at several of the company’s key plants, represents one of the most significant obstacles for Kelly Ortberg, Boeing’s newly appointed CEO.

Ortberg, an industry outsider from now-defunct aerospace firm Rockwell Collins, has already unveiled plans for large-scale layoffs and aggressive cash generation strategies to stave off a potential bankruptcy since his appointment in August.

In remarks he planned to deliver later Wednesday to investors, Ortberg said Boeing needs “a fundamental culture change in the company.” To accomplish that, he said, company leaders need to spend more time on factory floors to know what is going on and “prevent the festering of issues and work better together to identify, fix, and understand root cause.”

Ortberg repeated that he wants to “reset” management’s relationship with labor “so we don’t become so disconnected in the future.” He expressed hope that machinists will vote to approve the company’s latest contract offer and end their strike.

“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,” he said.

Earlier this month he told staff in a memo that proposed job cuts will affect 17,000 workers including executives, managers and other employees, representing around 10 percent of the company’s workforce. Furlough’s have also been put in place to conserve cash.

However, the strike by 33,000 Machinists in the Seattle area and elsewhere remains a major hurdle for the company.

Boeing cannot resume production of its 737 Max aircraft—a critical revenue source—until the strike is resolved. As of September 2024, the model has 4,756 unfilled orders.

This set back has been compounded by investigations into two fatal crashes in 2018-19.

“The pension should have been the top priority,” said Larry Best, a 38-year veteran of Boeing and customer-quality coordinator, speaking from a picket line outside Boeing’s plant in Everett, Washington.

“We all said that was our top priority, along with wage. 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’s frustration over pension issues reflects broader discontent among union workers, who are also pushing for a larger wage increase than Boeing has offered.

The company’s proposal includes a 35 percent wage raise over four years, $7,000 ratification bonuses, and the retention of performance-based bonuses that Boeing initially wanted to eliminate.

However, Boeing has resisted calls to restore the traditional pension plan, which was frozen a decade ago.

The Machinists’ union, the International Association of Machinists and Aerospace Workers (IAM), will hold a vote on Wednesday to decide whether to accept the offer.

Some workers, including Best, argue that the proposed wage increases are insufficient, particularly in light of rising inflation. Bartley Stokes Sr., another longtime Boeing employee who began his career at the company in 1978, expressed similar sentiments.

“You can see we got a great turnout today,” Stokes said.

“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.”

For Boeing, the stakes are high. The company has not turned a profit since 2018, and the third quarter results are expected to deepen its financial woes.

Analysts predict Boeing will report a $6 billion loss, with $3 billion tied to its commercial airline operations and another $2 billion attributed to its defense and space sectors.

Investors are keen to see how Ortberg handles his first earnings call as CEO, especially given the pressure from both federal regulators and financial markets.

Ortberg’s experience running Rockwell Collins, a supplier of avionics and flight controls for both military and civilian aircraft, has been cited as a potential advantage as he navigates Boeing’s current crisis.

However, Tony Bancroft, portfolio manager at Gabelli Funds and a Boeing investor, notes that resolving the strike should be his top priority.

“[He’s] got a lot on his plate, but he probably is laser-focused on getting this negotiation completed. That’s the closest alligator to the boat,” he said.

This article includes reporting from The Associated Press