Comment
Boeing begins long haul journey to former iconic status
October 1st 2024
Kelly Ortberg, the president and CEO appointed last August, has said Boeing is in a difficult position. Read More » That may be the understatement of the decade. He made the comment as the company, beset with labour and manufacturing woes, reported a staggering third quarter net loss of US$6.17 billion, increasing its losses for the year to date to almost $8 billion. A near eight week strike by 33,000 machinists did not help, halting aircraft production of the company’s best-selling single and twin aisle aircraft. After repeated times of asking, the striking employees ended their strike when Boeing agreed to a 43% pay increase over four years, a ratification bonus of $12,000 but no restoration of a pension plan.
The standoff with the machinists was an age old story of workers versus management. The workers have won, but they have increased Boeing’s financial woes.
As global ratings agency, S & P, wrote on November 5, the strike contributed to Boeing’s already significant financial problems. It forecast the company will gobble up $14 billion in cash this year and predicts the outflow will continue in 2025.
Ending the strike was a necessary first step to Boeing’s recovery. However, the bad news keeps on coming. Revenue from the OEM’s commercial airplane unit is lower by 5% year-on-year, at $7.443 billion, impacted by $3 billion in charges and higher expenses.
Deliveries have declined by 10%, with only 116 aircraft arriving – and late – with frustrated customers. Cost-cutting will soon include a 17,000 reduction in the company’s global workforce including executives, managers and employees. The 777X, Boeing’s new flagship aircraft, initially scheduled to enter commercial service in 2020, has been pushed back to a 2026 unveiling.
These woes, not to mention years of questionable quality standards, have prompted some speculation Boeing could collapse. Such an outcome is unlikely. For a start, the U.S. government will never allow the country’s largest aerospace company to go under.
And while Boeing’s current financial performance is, to say the least, woeful, it does have a backlog of more than 5,400 commercial aircraft orders valued at $511 billion.
Ortberg acknowledges the company is facing significant challenges, citing eroded trust, excessive debt and performance lapses that have disappointed many of its customers. He rightly adds it will take time to return Boeing to its former corporate glory, “but with the right focus and culture, we can be an iconic company and aerospace leader once again”, he said in an email to staff earlier this month. Let’s hope he is right.
TOM BALLANTYNE
Associate editor and chief correspondent
Orient Aviation Media Group
