The new boss of Boeing has pledged to “fundamentally” transform the culture inside the beleaguered aerospace giant, as its quarterly losses swelled to almost $6bn amid a sweeping strike.
As thousands of workers vote on a new contract on Wednesday, raising the prospect of an end to the crippling industrial action which began almost six weeks ago, Boeing revealed the extent of the damage of a dire year on its business.
Core operating losses at the US firm rose to $5.99bn in the three months leading up to 30 September, up from $1.09bn in the same period last year. Revenues slipped 1% to $17.8bn.
Kelly Ortberg, Boeing’s CEO, outlined three key challenges it faces after high-profile safety crises and operational troubles: trust in the company has “eroded”, it has too much debt, and “serious lapses” in performance have disappointed customers, he said.
About 33,000 Boeing workers in Washington and Oregon went on strike last month, halting production of the company’s 737 Max, 767 and 777 jets amid a standoff over pay. A proposed deal – including a 35% wage increase – has been put to a vote, sparking hope that an end is in sight.
The vote comes amid a tough year for Boeing. January’s cabin panel blowout during a flight of a brand new Max jet sparked a fresh crisis surrounding the safety and quality of its planes, as the group scrambled to tackle the concerns of regulators, airlines and passengers.
The company’s defense business has also been under pressure, and a mission involving its Starliner spacecraft – which landed back on Earth in September without the two astronauts it carried to the International Space Station – raised questions about Boeing’s troubled space business.
“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 Boeing’s employees and shareholders on Wednesday. While pointing to potential opportunities for the firm, with a vast backlog of orders, he made clear that navigating its current woes would require a vast overhaul.
Executives need to be “closely integrated” with what is happening on the ground, he suggested. “We need to be on the factory floors, in the back shops and in our engineering labs,” he wrote in a memo. “We need to know what’s going on, not only with our products, but with our people.
“And most importantly, we need to prevent the festering of issues and work better together to identify, fix, and understand root cause.”
As Boeing continues to grapple with heightened scrutiny, Ortberg invited workers and investors to judge him by the results of his measures, rather than his intentions, vowing to be “relentless” in shifting the Boeing culture “through action, not just words on a page”.
Boeing workers represented by the International Association of Machinists, based in Washington state and Oregon, were scheduled to vote on the proposed new four-year contract on Wednesday until 5pm.
Ortberg expressed optimism that they would approval the deal. “I remain committed to getting the team back and improving our relationship, so we don’t become so disconnected in the future,” he said. “I’m very hopeful that the package we put forward will allow our employees to come back to work so we can immediately focus on restoring the company.”
A vote of approval would only be the start, however – “it’s much harder to turn this on than it is to turn it off,” Ortberg noted – and the company still has a long way to go. “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,” he said.
Shares in Boeing dropped over 1% during early trading in New York on Wednesday.