Boeing reports a quarterly loss of $6 billion ahead of the union vote

EVERETT, Wash. (AP) — Boeing reported a third-quarter loss of more than $6 billion before turning its attention to whether striking factory workers would accept a contract offer A strike that has paralyzed the company’s aircraft production for almost six weeks will end on Wednesday.

Members of the International Association of Machinists and Aerospace Workers voted at union halls in the Seattle area and elsewhere on a contract that includes wage increases of 35% over four years. Their strike since mid-September has served as an early test for Boeing CEO Kelly Ortberg became CEO in August.

In his first comments to investors, Ortberg said Boeing needs “a fundamental culture change” and laid out his plan to turn the company around after years of heavy losses and damage to the reputation of the aerospace giant.

Ortberg reiterated in a message to employees and on the earnings call that he wants to “reset” management’s relationship with labor “so that we don’t become so alienated in the future.” He said business leaders need to spend more time on factory floors to know what’s going on and “prevent the festering problems and work better together to identify, solve and understand the root cause.”

Ortberg expressed the hope that the 33,000 striking machinists in the Pacific Northwest would vote to approve the company’s latest contract offer. Their union district was scheduled to announce results Wednesday evening.

Ortberg, a Boeing outsider who previously led Rockwell Collins, a maker of avionics and flight controls for aviation and military aircraft, said Boeing is at a crossroads.

“Confidence in our company has been damaged. We have too much debt. We have experienced serious performance declines across the business, leaving many of our customers disappointed,” he said.

But Ortberg also highlighted the company’s strengths, including a backlog of aircraft orders worth half a trillion dollars.

“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can once again become an iconic company and leader in aerospace,” he said.

Ortberg announced this earlier large-scale layoffs – about 17,000 people – and a plan to do that raise enough money to avoid a bankruptcy filing.

“He has a lot on his plate, but he is probably focused on closing these negotiations. That’s the closest we get to the boat,” said Tony Bancroft, portfolio manager at Gabelli Funds, an investor in Boeing.

Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represented the second-worst quarter in the manufacturer’s history. Boeing reported that it lost $6.17 billion in the period ended September 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research expected a loss of $10.34 per share.

Sales totaled $17.84 billion, matching Wall Street estimates.

The company burned through nearly $2 billion in cash this quarter, weakening its balance sheet, which is loaded with $58 billion in debt. Chief Financial Officer Brian West said the company will burn cash through 2025, but at a slower pace.

The shares of The Boeing Co. were down 3% in afternoon trading.

The long-profitable company’s fortunes subsequently deteriorated two of its 737 Max aircraft crashed in October 2018 and March 2019, killing 346 people. Safety concerns rose again when a panel blew off a Max on an Alaska Airlines flight in January.

Ortberg must convince federal regulators that Boeing is solving the problems safety culture and is ready to ramp up production of the 737 Max – a crucial step in raising much-needed cash. However, that cannot happen until the striking workers return to work.

In addition to pay increases, Boeing’s latest contract offer includes ratification bonuses worth $7,000 and the retention of performance bonuses that Boeing wanted to eliminate.

Boeing remained steadfast in opposing the union’s demand to reinstate a traditional pension plan that was frozen a decade ago. However, older workers would receive a slight increase in their monthly pension benefits.

At a picket line Tuesday outside a Boeing factory in Everett, Washington, some strikers encouraged colleagues to reject the revised contract.

“The pension should have been the top priority. We all said this was our top priority, along with wages,” said Larry Best, a customer quality coordinator with 38 years of experience at Boeing. “This is prime time’s best chance to get our pensions back, and we should all stay out and dig our heels in.”

Best also believes that the wage increase over three years should be 40 percent to offset a long period of stagnant wages, now combined with high inflation.

“You can see there was a big turnout today. I’m pretty sure they don’t like the contract because that’s why I’m here,” said another picketer, Bartley Stokes Sr., who started working at Boeing in 1978. “We’re going to show our solidarity and stand with our union brothers and sisters and vote this thing down because they can do better.”

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Koenig reported from Dallas.