What Can CEO Kelly Ortberg Do to Turn Boeing Around?

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Anderson Economic Group estimates the first month of the strike alone has cost Boeing US$5bn
Boeing has seemingly been grounded by production problems and company strikes. Can Boeing take off again?

Boeing CEO Kelly Ortberg has said he will “fundamentally transform” the culture within the troubled aerospace giant, as he announced a quarterly US$6.2bn loss. 

Kelly Ortberg said trust in the company has eroded and it needs to “prevent the festering of issues”. 

Ortberg, 64, added that Boeing is “saddled with too much debt” and there have been “serious lapses” in its performance.

The Boeing CEO was dealt a further blow this week after its striking workforce of 33,000 striking factory workers voted to reject Boeing’s latest offer and continue a strike that has halted most of the plane maker’s manufacturing.

Boeing machinists, represented by the International Association of Machinists, rejected a new proposal which included a 35% wage increase over four years. 

The strike has already gone on for five weeks.

The strike has deprived the company of much-needed cash that it gets from delivering new planes to carriers including Lufthansa and United Airlines. 

Anderson Economic Group has estimated that the first month of the strike alone has cost the company US$5bn.

Ortberg, who took over as chief executive in August, had pledged to work more closely with factory workers than his predecessors.

"First and foremost on everybody's mind today is ending the IAM strike. We've been feverishly working to find a solution that works for the company and meets our employees' needs," Ortberg said this week.

The standoff comes during an already challenging year for Boeing, which became the focus of multiple US federal investigations after a door panel blew off a 737 Max plane during an Alaska Airlines flight in January.

At a crossroads

Ortberg said the company was “at a crossroads” and needed to improve the operation of its 737 Max and 777 manufacturing lines and defence business.

Boeing announced plans earlier this month to cut 17,000 jobs or 10% of its global workforce.

“This is a big ship that will take some time to turn but when it does, it has the capacity to be great again,” Ortberg told employees.

Headwinds: Boeing CEO Kelly Ortberg has had a turbulent first couple of months

How CEO Kelly Ortberg can get Boeing flying again

Restart the factories

Ortberg said that once the strike is settled, the first task will be to restart Boeing factories and the supply chain. “And it’s much harder to turn this on than it is to turn it off,” he admitted. 

Management back on the floor

Addressing concerns about the company culture, Ortberg said Boeing’s leaders need to be “on the factory floors, in the back shops and in our engineering labs”.

Decide on the fate of the Boeing 797

Ortberg must decide whether to go ahead with Boeing’s long-planned new midrange jetliner, dubbed the 797, with an estimated US$50bn development cost. 

“Boeing is an airplane company and at the right time in the future we need to develop a new airplane,” he said. “But we have a lot of work to do before then.”

Persuade federal regulators

Ortberg needs to convince federal regulators that Boeing is fixing its safety culture and is ready to restart production of its troubled 737 Max, which has had multiple in-flight failures, including a door blowing off and jammed flight controls during landing.

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