Everett, Washington — Wednesday marks a crucial turning point in what has been an unpredictable year for Boeing. With expectations of revealing a significant third-quarter financial loss, the company is also set to introduce its newly appointed CEO during his inaugural earnings call. Additionally, the outcome of negotiations with striking machinists, who have significantly impacted aircraft production for over a month, could play a vital role in Boeing’s future operations.
The ongoing strike presents a crucial challenge for Kelly Ortberg, who took the helm as CEO in August and lacks prior experience with the company. Ortberg has already implemented extensive layoffs and initiated a strategy to secure the necessary funds to stave off bankruptcy. He faces the dual challenge of needing to reassure federal regulators that Boeing is rectifying its safety protocols while ramping up production of the 737 Max—a critical endeavor for restoring financial stability.
Currently, no new 737 aircraft can be manufactured as long as the strike continues, which involves approximately 33,000 machinists and has paralyzed assembly lines in the Seattle region for the past five weeks. According to Tony Bancroft, a portfolio manager at Gabelli Funds and Boeing investor, Ortberg is likely prioritizing the contract negotiations to urgently resolve this matter. “He has considerable responsibilities, but his focus is likely on concluding these discussions swiftly,” Bancroft noted.
Boeing has not seen a profitable year since 2018, and analysts predict that the financial situation may worsen further before improving. On Wednesday, expectations are that the company will disclose a staggering third-quarter loss of around $6 billion. This figure reportedly includes $3 billion in charges related to commercial aircraft and another $2 billion in losses from its defense and space sectors.
Investors will be keen to observe how Ortberg manages the earnings call, hoping for a display of composure, determination, and urgency as he addresses the company’s challenges for the first time since his previous leadership role at Rockwell Collins, which specializes in avionics and flight control systems.
The most pivotal news may emerge later in the day when the International Association of Machinists and Aerospace Workers announces the results of a vote by striking workers regarding Boeing’s latest proposal. The offer includes a 35% pay increase over four years, $7,000 ratification bonuses, and the continuation of performance bonuses that the company had intended to cut.
Despite Boeing’s firm stance against reestablishing the traditional pension plan that was frozen a decade ago, older workers would see a modest increase in their monthly pension benefits. Outside Boeing’s factory in Everett, machinists are seen advocating against the proposal. Larry Best, a long-time employee with 38 years at Boeing, stated, “The pension should have been our primary focus. Now is the time to secure our pension and we all need to stay united in our decision to hold out.” He believes that the proposed pay increase should be 40% over three years to effectively counter inflation and previous stagnant wages.
Bartley Stokes Sr., an employee since 1978, expressed solidarity with fellow picketers. He remarked, “The turnout today has been impressive, and it shows a clear dissatisfaction with the contract. We will continue to demonstrate our unity and collectively reject this offer, as we believe there is room for a better agreement.”