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Boeing has reported a $6 billion loss for the third quarter and has stated that it will continue to experience financial difficulties next year. The new chief executive, Kelly Ortberg, has warned that the company must undergo a cultural overhaul to overcome the crisis it has been facing for several years, which has severely impacted customer and investor confidence.
The company’s chief financial officer, Brian West, has indicated that Boeing will continue to use cash in 2025 as it ramps up production of the 737 Max and increases inventory of the 777X. However, he mentioned that the cash usage will be lower than in 2024. Boeing reported a cash burn of $2 billion in the third quarter, bringing the total for the year to $10 billion.
West stated, “It’s going to turn around in the second half of 2025, and then we will build momentum as production in the factories improves.”
Ortberg has mentioned that it is too early to determine whether the company will achieve its target of generating $10 billion in free cash flow in either 2025 or 2026, as outlined in 2022.
Addressing employees and investors, Ortberg stated that Boeing is currently at a critical juncture and that performance issues have led to a loss of trust, increased debt, and disappointment among customers. He emphasized the need to stabilize the business, enhance aircraft production processes, and ensure that executives are closely connected with the design and production teams.
Ortberg’s comments coincided with the ongoing voting by the company’s 33,000 machinists in Washington on a proposed deal that could end a nearly six-week strike. The revised offer includes a 35% wage increase over four years, a performance bonus, and improved retirement benefits, but it does not reinstate the defined benefit pension that many employees are still upset about losing in 2014.
Regarding the strike, Ortberg expressed optimism that the deal would bring an end to the standoff.
In contrast to his predecessor, Dave Calhoun, Ortberg relocated to Boeing’s manufacturing hub in Washington from Florida after assuming his role. He stressed the importance of being present on the factory floors, in the back shops, and in the engineering labs to understand the company’s operations.
Boeing is also looking ahead to developing a new aircraft in the future, but Ortberg acknowledged that there is much work to be done before that, including restoring the balance sheet to pave the way for the next commercial aircraft.
The aerospace company, which has faced significant challenges in recent years, has been grappling with cash flow issues as it addresses quality and manufacturing concerns following incidents like a door panel detaching from a commercial flight earlier this year. As part of its restructuring efforts, Boeing announced plans to cut 17,000 jobs to align with its financial situation.
Boeing reported a $5 billion charge in the third quarter, along with losses of $9.97 per share on $17.8 billion in revenue. The charges primarily stemmed from delays in the delivery of the 777X by another year, losses on fixed-price defence contracts, and other operational adjustments.
Despite the challenges, Ortberg affirmed that Boeing remains committed to fulfilling its defence contracts, which are vital for its relationship with the US government.
Boeing recently announced the potential sale of up to $25 billion worth of stock over three years to bolster its financial position. The company had $10.5 billion in cash and marketable securities at the end of the third quarter, slightly above its operational threshold, and is actively managing its liquidity.