Ryan Bergh, a machinist at Boeing’s factory in Everett, Washington for 10 years, cheers during a strike rally for the International Association of Machinists and Aerospace Employees (IAM) on the Seattle Union Hall in Seattle, Washington, on October 15, 2024. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images)
Jason Redmond | AFP | Getty Images
Boeing has already braced investors for a rough quarterly report. Now, recent CEO Kelly Ortberg has the possibility to share his vision for the troubled manufacturer, from a possible strike-ending labor agreement to a slimmed-down future.
When he takes the mic for his first earnings call as Boeing’s CEO on Wednesday, greater than 32,000 striking machinists will start voting on a recent, sweetened contract proposal. Results of the labor vote are expected Wednesday night.
Analysts are cautiously optimistic that the brand new proposal, which requires an easy majority of the vote, could pass, putting an end to the greater than five-week work stoppage that has halted a lot of the company’s production of airplanes and added to its money burn of about $8 billion in the primary half of the yr. Boeing last posted an annual profit in 2018.
“I feel it is going to be a good vote,” Jon Holden, president of the International Association of Machinists and Aerospace Employees District 751, told CNBC on Tuesday.
During Boeing’s earnings call, investors, analysts and the general public could get clues from Ortberg about what Boeing will seem like in the approaching years in addition to clearer estimates on the corporate’s production targets for the following yr.
Executives at key Boeing suppliers GE Aerospace and RTX told investors on Tuesday that they’re looking toward the work stoppage ending with a recent agreement.
RTX CFO Neil Mitchill said on an earnings call that in the corporate’s Collins unit, business aircraft component sales to manufacturers might be flat this yr, down from mid-single-digit growth it previously forecast.
“This outlook assumes that we’re in a position to restart some level of shipments to Boeing within the fourth quarter, and we see no change to the long-term structural demand” for products to plane makers, he said.
Boeing and S&P 500 five-year performance.
Narrowing businesses
Ortberg, a longtime aerospace veteran who previously ran Rockwell Collins, took the reins at Boeing in early August. His tall order was to right the ship.
The yr began with a terrifying midair door plug blowout on one in all Boeing’s recent 737 Max planes after it left the factory without key bolts reinstalled. The near-catastrophe occurred just as the corporate’s leaders were hoping to have regained the trust of regulators years after two deadly crashes killed 346 people, the primary of them six years ago this month.
As an alternative, Boeing’s rebuilding yr is getting pushed to 2025, and Ortberg has hinted at big changes ahead, promising employees and the general public greater focus on the 108-year-old company. Earlier this month, he said Boeing will slash 10% of its global workforce, about 170,000 people.
“We have to be clear-eyed in regards to the work we face and realistic in regards to the time it’s going to take to realize key milestones on the trail to recovery,” he told employees in an Oct. 11 message. “We also must focus our resources on performing and innovating within the areas which can be core to who we’re, reasonably than spreading ourselves across too many efforts that may often lead to underperformance and underinvestment.”
Boeing’s recent CEO Kelly Ortberg visits the corporate’s 767 and 777/777X programs’ plant in Everett, Washington, U.S. August 16, 2024.
Boeing | Marian Lockhart | Via Reuters
When Ortberg speaks at 10:30 a.m. ET on Wednesday, investors might be looking out for clues about what a smaller Boeing could seem like, and which programs or assets may very well be on the chopping block.
“We imagine [Boeing] is poised for further restructuring as the corporate looks to potentially divest parts of the portfolio and continues to concentrate on strengthening its supply chain,” said RBC analyst Ken Herbert in a note Sunday.
Raising money
Boeing said earlier this month that it’s going to post a nearly $10-per-share loss for the third quarter and report charges of about $5 billion in its defense and business businesses, where problems have spanned from manufacturing defects on passenger planes to problems with a refueling tanker and the delay of two 747s that can function recent Air Force One jets.
Because it bleeds money, Boeing last week revealed plans to boost as much as $25 billion in debt or equity or a mix of each.
Rankings agencies warned in recent weeks that Boeing could lose its investment-grade rating and the corporate is planning to extend liquidity.
Mending ties with employees, stabilizing supply chain
The outcomes of the union vote will come out hours after the earnings call. Meanwhile, the strike is costing Boeing $1 billion a month, based on S&P Global Rankings estimates.
Employees had complained that an earlier proposal wasn’t enough to combat the skyrocketing cost of living within the Seattle area over the past 16 years because the last contract was signed. In that point, high-paying jobs at technology firms flooded the realm, driving up the price of homes, the union said.
Boeing also said it stays committed to constructing its next jetliner within the Puget Sound area, a serious sticking point with employees who saw Boeing move 787 Dreamliner production to a nonunion factory in South Carolina.
Acting Labor Secretary Julie Su met with each parties earlier this month to work toward a deal.
Boeing 737s on the bottom in Renton, Washington.
Leslie Josephs | CNBC
Holden said the most recent proposed wage increases are the best the union has negotiated.
The union had originally sought wage increases of greater than 40%. Many employees had also wanted a reinstatement of a pension.
“Sometimes, that is how bargaining goes,” Holden said Tuesday. “You set your sights high, you set lofty goals to attempt to press further and further to expand what you may provide to your members. You never get all the pieces you wish, but we did thoroughly and it was the responsible decision to place this in front of our membership.”
The aerospace industry, which is heavily reliant on Boeing’s success, is appealing on to President Joe Biden to assist put an end to the strike.
Boeing supplier Spirit AeroSystems, which makes fuselages for the 737, last week said it will temporarily furlough 700 employees but said it could resort to layoffs or more furloughs if the strike goes on. Meanwhile, Boeing has reduce orders for suppliers on several programs to save lots of money.
“Since the aerospace supply chain is vast and interconnected, the ramifications of this strike extend beyond a single company, affecting countless suppliers across the nation,” the Aerospace Industries Association wrote in a letter to Biden. “We urge you to proceed engaging with all stakeholders involved to hunt a prompt and equitable resolution as soon as possible before the consequences turn into much more pronounced.”
— CNBC’s Phil LeBeau contributed to this report.
