Interface News Reporter | Xue Bingbing
On October 23rd local time, Boeing (NYSE: BA) released its third quarter report, which is also the first financial report submitted by the new CEO Kelly Allberg since he took office in early August.
Unfortunately, despite Otterberg's high-profile changes as soon as he took office, such as moving closer to the production line and relocating from the company's headquarters in Washington, D.C. to be based in Seattle, the birthplace of Boeing, it is still difficult to reverse Boeing's decline in the short term.
Losses in the first three quarters hit a new high since 2020
Financial data shows that Boeing achieved revenue of 17.84 billion US dollars in the third quarter of this year, with little difference compared to the same period last year, only a decrease of 1%; However, the net loss has significantly increased, expanding from $1.638 billion in the third quarter of last year to $6.174 billion in the third quarter of this year, with a year-on-year increase of 277% in losses.
From the overall performance of the first three quarters, revenue decreased by 8% year-on-year to $51.275 billion; A net loss of 7.968 billion US dollars was recorded, which is about 3.6 times the loss of the same period last year, setting a record for the largest loss since 2020. If we look at the annual losses, the losses in the first three quarters of this year have exceeded the total losses of 2022 and 2023.
Not only that, Boeing's operating cash flow has also turned from positive to negative. The operating cash flow for the first three quarters of last year was 2.579 billion US dollars, while the operating cash flow for the first three quarters of this year was negative 8.63 billion yuan. The financial report explains that the negative operating cash flow mainly reflects the decline in Boeing's commercial wide body aircraft deliveries and unfavorable cash flow opportunities, including the impact of union worker strikes.
According to Boeing's third quarter report, the company delivered a total of 291 commercial aircraft in the first three quarters of this year, compared to 371 in the same period last year, a decrease of 80 aircraft, a sharp drop of 22%. Specifically, the delivery of 737 series narrow body aircraft decreased from 286 to 229, 777 series wide body aircraft decreased from 17 to 11, and 787 series wide body aircraft decreased from 50 in the same period last year to 36. In the third quarter alone, the company delivered a total of 116 commercial aircraft of various types, a decrease of 11 compared to the same period last year.
Reflected in financial indicators, Boeing's commercial aircraft revenue for the first three quarters was $18.099 billion, a decrease of 23% compared to the same period last year; The operating loss climbed from $1.676 billion to $5.879 billion, with an operating profit margin of -32.5%.
According to Boeing's financial report, the current production of 787 wide body aircraft is 4 per month, and it is planned to return to 5 per month by the end of the year. However, Brian West, Executive Vice President and Chief Financial Officer of Boeing, also mentioned during the earnings call that the target of producing 38 737 aircraft per month by the end of this year has been postponed next year due to ongoing strikes and cash flow savings.
In a previous memo, the new CEO Kelly Altberg stated that the delivery of the new 777X aircraft will be postponed from next year to 2026, and Boeing will cease production of the 767 freighter before 2027.
Turn the giant wheel in the right direction
During the performance conference call, Kelly Otterberg bluntly stated that Boeing is at a crossroads, and the trust of the outside world in the company has been eroded. At the same time, Boeing is also burdened with too much debt, and the entire company has shown serious mistakes, which has disappointed many customers. However, Boeing also has huge opportunities, currently holding orders worth $500 billion.
So my task is simple and straightforward, which is to steer the Boeing ship in the right direction, and to achieve this, changes need to be made in four specific areas, "said Kelly Altberg.
Firstly, fundamentally changing the company's culture. Otterberg stated that cultural change begins at the top, starting with himself. Management at all levels needs to closely connect with people and businesses involved in product design and production, and work more in factory workshops, after-sales workshops, and engineering laboratories to identify, understand, and fix fundamental problems.
Secondly, stabilizing the company's operations and business. Otterberg said that this has been the central issue he has been concerned about since taking office in August, and the top priority now is how to end the strike of 33000 union workers. In my first week in office, I met with union leaders to let them know that we are committed to rebuilding our relationship and hope that our proposed package of salary increases and other measures can help employees return to their positions. As soon as they come back, our task is to immediately restart the factory and supply chain
During the conference call, it was also mentioned that another cornerstone of stable company operations and business is managing the balance sheet well to maintain a good investment grade credit rating. To this end, Boeing will streamline its investment portfolio to restore its balance sheet. In the third quarter report, a financing plan was also disclosed, which stated that the company signed a short-term credit line of $10 billion in October. Currently, the company's total credit line is $20 billion, but it has not been withdrawn yet.
The third and fourth aspects of the reform are respectively strengthening the overall organizational discipline and creating a new future for Boeing. Specifically, Boeing will reset priorities and create a more streamlined and focused organization. Otterberg also mentioned that the company recently announced a layoff plan, focusing on integrating areas with low efficiency and continuing to focus on reducing unnecessary activities.
On October 11th, Boeing announced plans to lay off approximately 10% of its workforce, involving around 17000 employees. The targets of layoffs will include executives, managers, and ordinary employees, and the layoffs will be carried out in the coming months.
At the recent performance conference call, Autoberg once again responded to the issue of layoffs. He stated that the focus of layoffs will be on simplifying management expenses and will not allow employees to leave production or engineering laboratories. At the same time, the team may be supplemented as needed, without excluding some additional external resources.