Boeing CEO discusses company’s future while workers vote on contract

boeing Investors are already bracing for a rough quarterly report. Now, new CEO Kelly Ortberg has a chance to share her vision for the troubled manufacturer, from a collective bargaining agreement that could end the strike to a streamlined future.

When he takes the microphone Wednesday for his first earnings call as Boeing’s CEO, more than 32,000 striking mechanics will begin voting on a new sweet deal. The results of the Labor vote are expected to be announced on Wednesday night.

Analysts say the new proposal, which requires a simple majority, will be passed, halting most of the company’s aircraft production and ending a more than five-week shutdown that has further increased its cash burn. I am cautiously optimistic that it is possible. Approximately $8 billion in the first half of this year. Boeing last posted an annual profit in 2018.

“I think it’s going to be a close vote,” International Machinists and Aerospace Workers District 751 President John Holden told CNBC on Tuesday.

At Boeing’s earnings call, investors, analysts and the public will get hints from Ortberg about what Boeing will look like in the coming years, as well as clearer predictions about the company’s production goals for next year. may be possible.

Boeing major supplier executives ge aerospace and RTX said Tuesday that investors are considering a new agreement to end the work stoppage.

RTX Chief Financial Officer Neal Mitchell said on an earnings call that the company’s Collins division’s sales of commercial aircraft parts to manufacturers will be flat this year, lower than the mid-single-digit growth he previously expected. said.

“This outlook assumes that we can resume some shipments to Boeing in the fourth quarter. We do not see any change in long-term structural demand for products for aircraft manufacturers,” he said.

Ortberg, a longtime aerospace veteran who previously ran Rockwell Collins, took over the reins at Boeing in early August. His difficult order was to get the ship back on track.

The year began with a horrific mid-air door plug explosion after one of Boeing’s new 737 Max planes left the factory without reinstalling the key bolt. The near-disaster came just as company executives were hoping to regain trust with regulators, years after two deadly crashes killed 346 people in the first one six years ago this month. .

Instead, Boeing’s turnaround year has been pushed back to 2025, and Mr. Ortberg promised employees and the public more focus on the 108-year-old company, hinting at big changes ahead. Earlier this month, he announced that Boeing would cut 10% of its global workforce, or about 170,000 jobs.

“We need to take stock of the task ahead and be realistic about the time it will take to reach key recovery milestones,” he told employees in an Oct. 11 message. “There is,” he said. “We also need to focus our resources on performance and innovation in areas that are core to our essence, rather than spreading them across a number of initiatives that can lead to poor performance and underinvestment.” .”

When Ortberg speaks Wednesday at 10:30 a.m. ET, investors will be looking for clues about what the small Boeing will look like and what programs and assets are planned. I’ll keep an eye on it.

“Boeing is poised for further restructuring as it considers the possibility of selling parts of its portfolio and continues to focus on strengthening its supply chain,” RBC analyst Ken Herbert said in a note Sunday. We believe that there is,” he said.

Boeing announced earlier this month that it would post a loss of nearly $10 a share in the third quarter and report about $5 billion in charges at its defense and commercial businesses, which have been plagued by problems ranging from manufacturing defects on airliners to refueling problems. did. Delays for two 747s used as tankers and the new Air Force One jets.

Amid the outflow of cash, Boeing last week unveiled plans to raise up to $25 billion in debt, equity, or both.

Ratings agencies have warned in recent weeks that Boeing could lose its investment-grade rating and that the company plans to increase liquidity.

The results of the union vote will be known a few hours after the results are announced. Meanwhile, S&P Global Ratings estimates that the strikes are costing Boeing $1 billion a month.

Workers had complained that previous proposals weren’t enough to combat the rising cost of living in the Seattle area over the past 16 years since the last contract was signed. At the time, high-paying jobs at high-tech companies flooded the area, sending home prices soaring, the union said.

The union rejected Boeing’s earlier, softer offer, which it called “best and final.” The new offer includes a 35% raise compared to 25% in the original tentative agreement, as well as a $7,000 signing bonus, additional 401(k) contributions and other improvements.

Boeing also remains committed to building its next jetliner in the Puget Sound region, a major bottleneck for workers that saw Boeing move production of the 787 Dreamliner to a nonunion factory in South Carolina. He said he is working on it.

Acting Labor Secretary Julie Su met with both parties earlier this month to try to reach an agreement.

Holden said the latest wage increase proposal is the highest the union has ever negotiated.

The union had initially asked for a wage increase of more than 40%. Many workers also wanted their pensions reinstated.

“That’s sometimes how negotiations work,” Holden said Tuesday. “We have set the bar high and set high goals to further expand what we can offer our members. We will never have everything we want, but we have done very well and we are pleased to introduce this It was a responsible decision to do so in front of our members. ”

The aerospace industry, which relies heavily on Boeing’s success, is appealing directly to President Joe Biden for help in ending the strike.

boeing supplier Spirit Aero SystemsThe company, which makes 737 planes, announced last week that it was furloughing 700 employees, but said it could resort to layoffs or further furloughs if the strike continues. Meanwhile, Boeing has cut backorders to suppliers in several programs to save money.

“The aerospace supply chain is vast and interconnected, so the impact of this strike extends beyond one company, impacting countless suppliers across the country,” the Aerospace Industries Association said in a letter to Biden. “There is,” he said. “We urge you to continue to engage with all relevant stakeholders to seek a swift and fair resolution as soon as possible, before the impact becomes more pronounced.”

—CNBC’s Phil LeBeau contributed to this report.