Everett, Wash. – Boeing reported a loss of more than $6 billion in the third quarter and immediately turned the spotlight on unionized workers.
The results of a vote by International Mechanics and Aerospace Workers, which will determine whether striking workers will return to their jobs, could come as late as Wednesday night.
They will vote at union halls in the Seattle area and elsewhere on the Boeing offer, which includes a 35% pay raise over four years, a $7,000 ratification bonus and retention of performance bonuses that Boeing wants to eliminate.
Boeing is determined to resist union demands to restore a traditional pension plan that was frozen more than a decade ago. However, older workers will get a slight increase in their monthly pension.
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In a picket line outside Boeing’s factory in Everett, Washington, some machinists encouraged colleagues to vote no.
“Pension should have been a priority. “We all said this is our top priority along with pay,” said Larry Best, a customer quality coordinator at Boeing for 38 years. “Now is a key opportunity at a key time to get our pensions back and we all need to be out there and digging in our heels.”
Best also thinks wage increases will need to be 40% over three years to compensate for long-term wage stagnation combined with high inflation now.
“You can see we got a big turnout today. I’m sure they don’t like the contract, and that’s why I’m here,” said another picketer, Bartley Stokes Sr., who started working at Boeing in 1978. “We’re here in practice, and we’re going to show our solidarity and stick with our union brothers and sisters, and We’re going to vote this thing down because they can do better.
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Meanwhile, new CEO Kelly Ortberg laid out his plan to turn Boeing around after years of heavy losses and damage to its reputation.
In comments he planned to deliver to investors later Wednesday, Ortberg said Boeing needed “a fundamental cultural change in the company.” To accomplish that, he said, company leaders must spend more time on factory floors to know what’s going on and “work better together to prevent problems from escalating and to identify, fix and understand the root cause.”
Ortberg reiterated that he wants to “reset” management’s relationship with labor “so we’re not so disconnected in the future.” He expressed hope that the machinists would vote to ratify the company’s latest contract offer and end the strike.
“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can once again be an iconic company and aerospace leader,” he said.
The strike was an early test for Ortberg, a Boeing expatriate who became CEO in August.
Ortberg has already announced plans to raise enough cash to avoid large layoffs and a bankruptcy filing. He must convince federal regulators that Boeing is fixing its safety culture and is ready to ramp up production of the 737 Max — a critical step toward bringing in much-needed cash.
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Boeing will not be able to produce new 737s until it ends a strike by 33,000 mechanics that has shut down assembly plants in the Seattle area.
Ortberg “has a lot on his plate, but he’s probably laser-focused on getting this deal done. That’s the closest alligator to the boat,” said Tony Bancroft, portfolio manager at Capelli Funds, a Boeing investor.
Boeing hasn’t had a profitable year since 2018, and things will get worse before they get better.
Boeing said Wednesday it lost $6.17 billion in the period ended Sept. 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research had called for a loss of $10.34 per share.
Total revenue was $17.84 billion, matching Wall Street estimates.
Stocks were flat before the opening bell.
Investors will look for Ordberg to project calm, certainty and urgency as Rockwell Collins presides over an earnings call for the first time since running the company, a maker of avionics and flight controls for airline and military aircraft for the past decade.
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