Boeing CEO Kelly Ortberg laid out a cautious path to turn the company around on Wednesday, calling for a “fundamental culture change” at the struggling planemaker as its quarterly losses surged to $6 billion due to a crippling strike.
The company has now racked up losses of nearly $8 billion for the current year, as a halt in production of its 737 MAX, 777 and 767 planes following the strike and an ailing defense and space division hammer its business.
Boeing CFO Brian West told analysts he expects the company will continue burning cash in full year 2025 and the last three months of 2024, sending shares of Boeing down 3.1% to $154.86.
Ortberg told CNBC on Wednesday that Boeing is now reviewing its businesses and may end up selling some assets, as it downsizes its workforce to focus on the company’s key civil planemaking and core defense units.
“We’re overstaffed for the forecast of our business going forward, so we need to right size and be efficient, and I think we need to continue to do that as we go forward,” he said.
In a letter to employees, Ortberg stressed the need for improving performance in its defense business and its 737 MAX and 777 programs while broadly stabilizing Boeing, which is “at a crossroads” after lapses in its performance disappointed customers and eroded trust.
“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 the planemaker’s employees in a message containing prepared remarks for his first earnings call as CEO.
West said the company has a plan to address Boeing’s balance sheet in the near term that could include an offering of equity and equity linked securities, but did not specify a time frame. Reuters has reported the raise could be around $15 billion.
Ortberg’s call to arms follows sweeping plans for significant downsizing announced earlier this month as a strike by about 33,000 workers that has dragged on for more than a month hits production of its best-selling 737 MAX jet as well as 767 and 777 widebody planes.
The former Rockwell Collins executive, who took the helm of the planemaker in August, said he was hopeful that a new contract proposal being voted on Wednesday by more of the striking workers would be approved, though analysts say ratification is not certain.
It is a crucial day for the planemaker, which was already struggling with the fallout from a regulator-imposed cap on production of MAX aircraft following a harrowing mid-air door panel blowout.
Ortberg said in his remarks that culture change was discussed at a recent meeting with top company executives.
“We need to prevent the festering of issues and work better together to identify, fix and understand root cause(s),” Ortberg said. “I’ve already introduced a much more detailed business cadence to drive this across the organization and this process of change is underway.”
But even if the strike ends, restarting production of 737 MAX as well as 767 and 777 widebodies will be a fresh challenge given the supply chain is still struggling in some pockets.
Boeing will also have to convince suppliers who have announced furloughs and put off investments over the last few weeks, to now reverse course and support its production plans.
“It’s much harder to turn this on than it is to turn it off,” Ortberg said, referring to its factories and the supply chain.
He noted that Boeing had a “lot of work to do” before developing a new airplane.
“This includes stabilizing our business, improving execution on the development programs, streamlining the portfolio to do what we do well and restoring the balance sheet so that we do have a path to the next commercial aircraft,” Ortberg said.
“We view his (Kelly’s) comments as encouraging, as Boeing has historically been averse to recognizing that it has issues, let alone actually fixing them,” Vertical Research Partners analyst Robert Stallard said.
Boeing on Wednesday reported a quarterly cash burn of $1.96 billion, compared with a cash burn of $310 million a year earlier.
Quarterly revenue fell 1% to $17.84 billion.
The company’s commercial aircraft business recorded a $4 billion loss, while its defense, space and security business lost $2.38 billion.