Boeing's new captain promises U-turn after Q3 nosedive
- Reference: 1729701009
- News link: https://www.theregister.co.uk/2024/10/23/boeing_q3/
- Source link:
Boeing shared its third quarter [1]results today, ahead of an earnings call later this morning, and things are looking even worse than they were before Ortberg took the yoke.
Whereas Boeing [2]lost $1.4 billion in Q2 , it reported a net loss of $6.1 billion for the previous three months, with free cash flow negative by nearly two billion dollars, and lots of [3]missed analyst expectations.
[4]
Ortberg, who stepped into his role in August shortly after Boeing published Q2 numbers, shared his prepared remarks for today's earnings [5]call ahead of time because, he [6]said , "the only way to be successful is by working together."
[7]
[8]
"It will take time to return Boeing to its former legacy but, with the right focus and culture, we can be an iconic company and aerospace leader once again," Ortberg said. "We will be focused on fundamentally changing the culture, stabilizing the business and improving program execution, while setting the foundation for the future of Boeing."
Those four areas – culture, business stabilization, execution discipline, and future planning – are fundamental to what Ortberg sees as his mission at the company: "Turn this big ship in the right direction and restore Boeing to the leadership position that we all know and want."
[9]
One of the first things that Boeing needs to do, he explained, is [10]end the strike that's shuttered Boeing factories in the Pacific Northwest since last month after International Association of Machinists and Aerospace Workers (IAM) members rejected a new contract.
Boeing blamed much of its poor performance in the past quarter on the strike, fingering the IAM's work stoppage for its general losses, lack of cash flow, and poor commercial aerospace operating margin.
Talk about timing
Luckily, Boeing's earnings call and Ortberg's remarks are perfectly timed to avoid a stock shock as IAM members are headed to the polls to [11]vote on ratifying a new contract proposal today. It's one that acting US Labor Secretary Julie Su had to step in [12]directly to help hammer out, mind you, but it's a potential deal nonetheless.
IAM and Boeing announced the newly negotiated contract over the weekend, and Boeing shares jumped Monday following the announcement. Shares have been up and down this morning since the earnings numbers were published, but not by very much, suggesting Boeing may be managing to defy the gravity of a second dismal quarter on share prices. Sure, they've dipped a bit today, but not enough to erase gains from Monday on the back of the possible union deal.
It's not clear whether union members will be handing Ortberg a win today or not; polls are open until 1700 Pacific Time, and it's not clear how members feel. We've reached out to the union, but haven't heard back outside of its normal operating hours.
[13]Boeing's Calamity Capsule returns to Earth without a crew
[14]Boeing to reacquire spun-off supplier Spirit AeroSpace to shore up safety
[15]Report slams Boeing and NASA over shoddy quality that's delayed SLS blastoff
[16]Fraud guilty plea flies from Boeing to swerve courtroom over 737 Max crashes
"We look forward to our employees voting on the negotiated proposal," Boeing told The Register when asked about the vote.
Speaking of holding out for hope before dumping shares, Ortberg alluded to the [17]recently delayed (again) 777X jet in his remarks about planning for Boeing's future, describing Boeing as "an airplane company" that needs "to develop a new airplane," but noting the company has "a lot of work to do before then."
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What that means for the future of the 777X, which is now scheduled to be delivered in 2026 after missing 2020, 2022, and a planned 2025 window, is unclear. Ortberg said Boeing needs "to reset priorities and create a leaner, more focused organization," which could suggest the company is planning more structural changes before getting back into the engineering business.
Recent layoffs will likely continue, Ortberg said, as despite some recent cuts "we need to continue to focus on reducing non-essential activity."
Whether Ortberg's Boeing will continue on its path, even if the company's market cap decreases, remains to be seen – Boeing has [19]allegedly transformed over the years from an engineering-driven firm to one obsessed with shareholder profits, giving Ortberg a lot to push against. The new CEO, Boeing's first in years with an engineering background, seems to think his work is going to take time.
"We have a lot of work to do," Ortberg concluded at the end of his remarks, adding: "We have a plan and change is already under way."
We'll just have to wait three months to see if that plan is working. ®
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[1] https://boeing.mediaroom.com/2024-10-23-Boeing-Reports-Third-Quarter-Results
[2] https://www.theregister.com/2024/07/31/boeing_q2_2024/
[3] https://finance.yahoo.com/news/boeing-nyse-ba-misses-q3-114335731.html
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZxlyBUx1tDYrMVKhYc5JjAAAAQQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://investors.boeing.com/investors/events-presentations/event-details/2024/Q3-2024-The-Boeing-Company-Earnings-Conference-Call/default.aspx
[6] https://boeing.mediaroom.com/news-releases-statements?item=131499
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZxlyBUx1tDYrMVKhYc5JjAAAAQQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZxlyBUx1tDYrMVKhYc5JjAAAAQQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZxlyBUx1tDYrMVKhYc5JjAAAAQQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2024/09/13/boeing_hit_by_strike_action/
[11] https://www.iam751.org/2024strikeproposal/
[12] https://www.reuters.com/business/aerospace-defense/boeing-workers-will-vote-proposal-that-could-end-strike-union-says-2024-10-19/
[13] https://www.theregister.com/2024/09/07/boeing_starliner_returns/
[14] https://www.theregister.com/2024/07/01/boeing_reacquires_spirit/
[15] https://www.theregister.com/2024/08/09/nasa_boeing_sls/
[16] https://www.theregister.com/2024/07/08/boeing_guilty_fraud_charge/
[17] https://www.theregister.com/2024/10/14/boeing_layoffs_delays/
[18] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZxlyBUx1tDYrMVKhYc5JjAAAAQQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[19] https://www.npr.org/2019/10/26/773675393/boeings-cultural-shift
[20] https://whitepapers.theregister.com/
Call me
I know where to buy original Loctite and good quality washers. Boeing call me and I'll turn your company around.
Re: Call me
Duct tape. You forgot the duct tape.
"...after Q3 nosedive..."
Well, Boeing had better hope that Ortberg can guess what the real problem is amidst the chaos and figure out which levers to pull and switches to flip to avoid a Q4 smash into the ground then.
Re: "...after Q3 nosedive..."
One of the real problems is that Boeing did massive stock buy-backs which pushed up stock price and enriched the stockholders (including top level management), and also burnt the cash stockpile that could othewise be spent now to fix the endemic manufacturing quality issues.
Re: "...after Q3 nosedive..."
It isn't just the manufacturing issues, it's the lack of new product. The 777X may be Boeing's latest and greatest, but it's an update on the 777, which first flew 30 years ago. The 737 MCAS problems were in essence founded in Boeing's reluctance to develop a new aircraft to replace the 737 (first flight 1967). Obviously all airframe makers will keep making and updating an airframe as long as the market keeps buying it, but Boeing appear to have a particular reluctance to invest in genuine new product development. Their newest airframe is the 787 that first flew 15 years ago. And just to compound their woes, Boeing do daft things like develop this "new" 777X with no engine choice.
As you say, stock buy backs took precedence over all else, and that included both Boeing's present and future. US capitalism at its finest.
Personally I'd like to see Boeing repair itself - but when it's got a self-screwed up culture, industrial relations from the dark ages, has spent its cash pumping its own stock rather than R&D and new product, has buggered up its own space business, has buggered up its own defence business, needs to re-integrate Spirit, has persistent quality problems, and a wider public reputation akin to the brown smelly stuff you sometimes tread in.....seems a big, big ask that will take at least a decade.
Re: "...after Q3 nosedive..."
Maybe the bean counters were replaced with all the failed 737 MCAS units?
Seems it's not just aeroplanes that have a problem.
Intel and Boeing succinctly
14++...+ and 737++...+
Boeing has not missed in a VERY long time...
"There is an art, the Guide says, or rather, a knack to flying. The knack lies in learning how to throw yourself at the ground and miss. … Clearly, it is this second part, the missing, which presents the difficulties.”
― Douglas Adams, Life, the Universe and Everything
The Boeing-made Intelsat 33e satellite has disintegrated
https://spacenews.com/intelsat-33e-loses-power-in-geostationary-orbit/
"The Intelsat 33e satellite has broken up in geostationary orbit (GEO) and lost power, ceasing communications services for customers across Europe, Africa and parts of Asia Pacific."
"Intelsat 33e launched in August 2016 and entered service in January 2017 at 60 degrees East, about three months later than planned following an issue with its primary thruster."
"A second propulsion issue that emerged during in-orbit tests helped knock off around 3.5 years from the satellite’s initially estimated 15-year lifespan."
They're tracking at least 20 chunks of the satellite. Oh yeah, and the satellite wasn't insured, either.
The hits just keep comin'...
Re: The Boeing-made Intelsat 33e satellite has disintegrated
"The hits just keep comin'.."
(Icon).....hopefully not on my head!
More executions?
>"Those four areas – culture, business stabilization, execution discipline, and future planning"
The "execution discipline" bit will worry other potential whistleblowers.
No more sloppy executions of Boeing whistleblowers now?
Another CEO?
The more things change, the more they remain the same.
A U-turn after a nose-dive? He needs to be flying a Sopwith Camel.