This story originally appeared on AirlineGeeks.com.
The Boeing Co. (NYSE: BA) reported a loss of over $6 billion in the third quarter during an earnings call on Wednesday.
The $6.2 billion loss was largely attributed to substantially increased operating costs due to strikes by the International Association of Machinists and Aerospace Workers (IAM) union since Sept. 13. Boeing also cited previously announced program changes as a factor impacting revenue loss.
The loss is about four times larger than last year’s Q3, and Boeing’s year-to-date loss is $8 billion. Deliveries year to date are down 80 from last year to 291.
Boeing CEO Kelly Ortberg sent an emailed statement before the earnings call Wednesday morning, saying the company is at a crossroads.
“The trust in our company has eroded,” he said in the statement. “We’re saddled with too much debt [and] we’ve had serious lapses in our performance across the company which have disappointed many of our customers.”
Ortberg added that his mission is to turn the Boeing ship in the right direction and restore its reputation. To do that, he said Boeing needed a fundamental culture change in the company, stabilization of the business, improvement in execution discipline on new platform commitments across the company and determination to build “a new future for Boeing.”
“While we are somewhat consumed with the challenges of today, we need to be setting the foundation of the future for Boeing,” Ortberg continued. “Boeing is an airplane company and at the right time in the future we need to develop a new airplane. But we have a lot of work to do before then. This includes stabilizing our business, improving execution on the development programs, streamlining the portfolio to do what we do well and restoring the balance sheet so that we do have a path to the next commercial aircraft. We need to reset priorities and create a leaner, more focused organization.”
IAM votes on new contract
On the machinist strike, Ortberg stated that Boeing leadership has been working feverishly to find a solution that works for the company and meets employees’ needs.
“I met with the union leadership the first week on the job and let them know that I was committed to resetting the relationship,” Ortberg said. “And I remain committed to getting the team back and improving our relationship so we don’t become so disconnected in the future.
I’m very hopeful that the package we put forward will allow our employees to come back to work so we can immediately focus on restoring the company.”
Union members of IAM Districts 751 and W24 are voting on a new contract proposal from Boeing on Wednesday and expect to announce the results of the vote later in the evening. Details of the offer provided by IAM include a 35% wage increase – 40% when compounded – over the four-year life of the contract and a $7,000 ratification bonus.
Also included is a company 401(k) match increase to 100% of the first 8% contributed, in addition to a special, guaranteed company retirement contribution of 4%. A one-time $5,000 contribution will also be made to each eligible member’s Boeing 401(k).
Absent from the new contract is the reinstatement of the union’s pension, which was given up in 2014’s contract. The Seattle Times reported that this issue has members split on their decision to approve or reject the new contract offer.
Members will vote in person, and a simple majority of over 50% of those voting will determine the outcome. If the vote passes, workers will return to work by the beginning of their shifts on Oct. 31.
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