Boeing's new captain promises U-turn after Q3 nosedive

Earnings reported the same day striking union workers vote on a new contract

If Boeing's second quarter was dismal, its Q3 numbers are abysmal, giving recently ensconced CEO Kelly Ortberg the perfect opportunity to fly to the rescue with a revitalization plan.

Boeing shared its third quarter 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 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 missed analyst expectations.

Ortberg, who stepped into his role in August shortly after Boeing published Q2 numbers, shared his prepared remarks for today's earnings call ahead of time because, he said, "the only way to be successful is by working together."

"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."

One of the first things that Boeing needs to do, he explained, is 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 vote on ratifying a new contract proposal today. It's one that acting US Labor Secretary Julie Su had to step in 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.

"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 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."

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 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. ®