Boeing reported huge quarterly losses on Wednesday, with new CEO Kelly Ortberg acknowledging that “it will take time to return Boeing to its former legacy.”
In the company’s quarterly statement, Ortberg emphasized the need for a fundamental shift in culture, business stabilization, and improved program execution. He took the reins of the troubled aircraft manufacturer in August, just before a strike by 33,000 members of the International Association of Machinists began.
“We’re clearly at a crossroads,” Ortberg stated during an investor call. “Trust in our company has eroded. We’re burdened with excessive debt, and we’ve experienced serious lapses in performance that have disappointed many of our customers.”
Ortberg cautioned that resolving these issues won’t happen overnight. “We need to embark on a culture change that goes beyond just a poster on the wall; it must guide our daily operations,” he added.
Boeing’s net loss soared to $6.2 billion, up from $1.6 billion a year earlier, with a $4 billion operating loss attributed to its commercial airplane unit, the most troubled segment. Notably, the strike only affected the final two weeks of the three-month reporting period. The company also reported a $2.4 billion operating loss in its space and defense sector, which was not impacted by the strike.
The losses stem not only from the strike but also include a $3 billion pre-tax charge due to delays in the next-generation 777X commercial jet. The aircraft has faced issues during test flights, pushing back its first delivery to customers until 2026, alongside plans to phase out the 767 freighter jets.
Boeing is also taking a $2 billion pre-tax charge related to challenges in several defense and space programs, including its Starliner spacecraft. The Starliner, which completed its first crewed flight in June, encountered issues that forced it to return from the International Space Station without crew members, leaving two NASA astronauts stranded for months. They are now set to return to Earth via a SpaceX spacecraft. The financial impact of the Starliner program is estimated to be in the hundreds of millions of dollars.
Despite these setbacks, Boeing remains a vital player in the U.S. economy, serving as the country’s largest exporter with an estimated annual economic contribution of $79 billion. The company supports 1.6 million jobs directly and indirectly across 10,000 suppliers in all 50 states, some of whom have already begun layoffs due to the strike.
Fortunately for Boeing, its current financial crisis is unlikely to threaten its existence. As part of a duopoly with European rival Airbus, Boeing’s position in the market is relatively secure. Both companies are the only manufacturers of full-size jets needed by the global airline industry, and they face massive backlogs in orders. Any airline that canceled its Boeing orders to switch to Airbus would likely have to wait four to five years for delivery.
