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Boeing CFO: we want to negotiate; taking steps to preserve cash

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By Scott Hamilton

Sept. 13, 2024, © Leeham News: Brian West, the CFO of The Boeing Co., said management wants to get back to the negotiating table with its largest union, the IAM 751, to reach a new contract agreement as quickly as possible.

He also said the company is taking steps to preserve cash following a strike that began at midnight yesterday after the union rejected a contract by an unprecedented 95% vote and authorized a strike with 96% of the vote.

The strike comes at a time when Boeing is losing billions of dollars in cash, remains in a loss-making position, and struggles to recover from five years of crises and self-inflicted turmoil.

West made his remarks this morning in a previously schedule appearance at the annual Morgan Stanley Laguna Beach investors conference.

An edited transcript of his appearance follows.

[Morgan Stanley]

Last night we had the IAM union vote, and we had a 96 percent rejection of the contract. I guess the first question is, are you surprised, and where do we go from here?

[Brian West]

We were disappointed. Initially we were pretty pleased [with the contract Tentative Agreement].

We had an unprecedented temporary agreement that was unanimously endorsed by union leadership. Over the last few days, it became very clear, loud and clear, with our union members that that offer didn’t meet the mark, and it was not acceptable. So, there was a disconnect. And our CEO [Kelly Ortberg] went right to the factory floor. He’s been out there all week listening firsthand to the feedback of our employees.

Kelly’s already at work to get an agreement that meets and addresses their concerns. In the meantime, it’s our responsibility to ensure continuity as best we can. We’ll communicate with our customers, our suppliers, our government regulators and constituents as we move through the next period of time.

Cash impact
[Brian West, con’t]

From a financial perspective, any impact is going to be dictated by the duration of the work stoppage, which I won’t address today. But a strike will impact production and deliveries and operations and will jeopardize our recovery. Our immediate focus is to be laser-like focused on actions to conserve cash, and we will.

We’ve got a very complex situation that we’re resolving. Kelly is personally engaged and focused on restoring our trust with our people and the union. That’s a priority, resetting that relationship. We want to get back to the table. We want to reach an agreement that’s good for our people, their families, our community, and our intent is to do just that.

[Morgan Stanley]

Kelly Ortberg joined as CEO starting at the end of July. You mentioned his first priority. But can you talk about other priorities he has in this new seat, and what are the biggest changes that you anticipate in the company’s approach in tackling the issues facing Boeing today?

[Brian West]

Well, the priorities for the company broadly are very clear. First, we’ve got to recover our commercial business. Secondly, we’ve got to bring stability and de-risk our defense business.

And third, our capital structure has to reflect the investment grade credit rating. Those are three priorities that we’re focused on. In terms of approach, new CEO is bringing different perspectives.

Being from the industry and knowing the company, his instincts are spot on. He’s digging in deep. In terms of what’s changed or what’s an adjustment, I’d point to one thing. He has bought a house in Seattle.

[Editor’s note: Boeing moved its headquarters from Seattle in 2001. Criticism has been leveled ever since that the corporate CEO was disconnected from Boeing’s largest business unit and disconnected from the workforce in Seattle. Ortberg’s decision to live and work in Seattle is a clear break from this past.]

He is focused on getting close to that factory floor, and that started from day one. He expects that from all of us. I think that will be a new and welcome approach.

Impact on raising production
[Morgan Stanley]

Moving to the 737 MAX, can you help us better understand how the FAA is affecting operations today? What’s the path for the FAA to remove the 38 per month cap on production?

[Brian West]

I’ll speak prior to the strike. We’ve been making good progress on stabilizing production and preparing for that 38 per month by the end of the year. Now, obviously, that’s going to take longer.

As far as the FAA, our safety and quality plan, was laid out early in the year. We are measuring ourselves to those key process indicators, including the control limits around that, to reflect stability of the factory. We look at those measures all the time, every day, and our regulator has access to the same information. We’ve been making improvements up until now. But the framework and the metrics are in place.That will ultimately determine how we move up in rate directed by the FAA.

[Morgan Stanley]

Looking at the deliveries pre-strike for the 737 MAX, we saw improved deliveries in June, and July. August was also fairly stable. At this point, how do you expect production to progress through the year? Is it still feasible to get to 38 per month by year end?

[Brian West]

I can’t comment on 38 per month. That rate is so dependent upon the duration of the strike, so I won’t touch on that. But I will tell you that if you remember back in March, we were in the high single digits for deliveries, and then in June and July we moved into the 25 range.

We also had begun to start up that third line, which we’ve talked about as being very important to moving towards that more complete rate. We had it fully resourced. We were demonstrating proficiency.

The team had done a very nice job of deliberately ramping production while, at the same time, incorporating significant improvements into our quality production system. There was very good momentum. Unfortunately, there’s now a strike.

The health of the production system was going in the right direction. And my expectation is we’ll pick right back up where we left off, but I don’t know when. Deliveries in August were similar to July.

I will tell you, I think there was a third consecutive month of having deliveries in the 30s, another indication of momentum. We had 15 airplanes delivered from inventory in August. That was a big accomplishment for the team.

There’s around 70 left. All of this is disappointing because of this work stoppage, because things were starting to move in the right direction.

777X thrust links and certification
[Morgan Stanley]

Moving to the 777X thrust links, we saw news of what happened there. Can you discuss the impact of entering the service and the free cash flow impact it would have on 2024, 2025, and 2026 for the program?

[Brian West]

We can talk about certification programs broadly, and then I’ll get into the thrust link. On the CERT process, the one thing that’s going pretty well is on the [737] dash 7 and dash 10, there’s an anti-icing solution that we are working on. The good news is it’s been identified, it’s been designed, and we are undergoing testing.

That’s a positive. And those timelines and what we’ve expected have been unchanged. Hats off to the team for working their way through what was a complicated item and constantly working through that. We feel good about those two on the certification front.

On the 777X, as reported, we discovered damage on one of the thrust links on the flight test aircraft and immediately paused the flight test program. Right now, the team is working to understand root cause corrective action, and once that is determined, they’ll be able to understand the path forward and any impact to schedule.

Last week the original airplane flew back safely from Kona to Seattle The team is well underway to work out those next steps. We have to give the team time to assess the situation and then a path forward.

777X cash flow

In terms of your questions on cash flow, like any development program, cash flows tend to be negative and then they go positive. We’re seeing the impact this year of inventory build on the 777X program. In the first two quarters of the year, it was in the $800m per month inventory build level. That will continue as we move through entry into service.

Once you get out of entry into service, the model, like any development program, will turn positive and the profile will change. As you get deliveries and production ramp, all of that will unwind. That’s the nature of the program. We still expect the 777X to represent that kind of profile.

 Category: Boeing, IAM 751, International Association of Machinists

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127 Comments on “Boeing CFO: we want to negotiate; taking steps to preserve cash”

  1. Interesting, if vague, words on the MAX-7 and MAX-10 certifications. We’ll see how it goes.

    Seems to me that Boeing should’ve been ready to negotiate in earnest
    *before* the strike. Maybe there’s something else going on, though.

    • I blame union leadership more than management for the bad miss. If union leadership would have had a better read on their membership they would have emerged from negotiations with a recommendation to reject the contract. How can anyone in the IAM have confidence their leadership has a clue?

      Beyond that a lot of word salad. Rate 38 will have to come from aircraft not in the rock pile of shutdown aircraft soon. Only 70 left.

      I get a sense the alarm bells in corporate at Boeing went off yesterday when it finally dawned on them this was going down. That passionate speech Ortberg wreaked of desperation.

      Maybe the IAM negotiators needs to consult with the rank and file before re-engaging in negotiations.

      • Thanks for this comment. I too wonder how union leadership could be so far from the rank-and-file’s concerns, and why exactly Mister Holden was pushing this unfortunate attempt so hard. Hmm..

        96% voting to strike says a whole lot, IMO.

      • The Union leadership see numbers the rank and file do not. Hence they might understand what costs Boeing can take now and the need for automation and reduce manhrs to build the next airliner.

        • Isn’t that more or less what led to the door plug blow-out? A reduction in human teams capable of keeping critical work in-station?

          • It will be the opposite like in most manufaturing, higher skills but fewer that can run the automated lines.

      • Maybe the IAM leadership recommended the deal in order to avoid a strike during a presidential election that could look damaging for the Democrats.
        But getting only 1 in 20 of its members to support it means that maybe new negotiators need to be in place for round 2 with Boeing.

      • I agree with Casey. That is both weird and a cop out that we can’t get a better deal and then recommend it. You can just say Boeing was not budging and here it is.

        Union leadership is out of touch and there will be a shakeup there as well.

  2. I have been involved in negotiations on the union side – perhaps some here need to realise that decisions and tactics are inevitably different as one has to deal with the greater political power (and normally greater political support) that is available for management. In this case the leaders would be fully aware that almost any deal they took back would be rejected BUT had they failed to take back what appears to be a serious offer by Boeing AND had they taken it back without a formal recommendation then: Obviously and almost inevitably Boeing could go to a labour board (or whatever the US variant is called) and charge the union with false or improper (or whatever is the terminology in the US) bargaining. Which is perfect for Boeing since
    1: It stops the process – no immediate strike
    2: Knowing what some labour boards are like, there would be a fair chance of them agreeing with management and ordering compulsory arbitration using the last offer as the base.
    3: Postpone for an indeterminate time any need to spend more money on their labour force while the stock-price did not collapse.

    Of course I have no idea as to how correct I am (our nations and employees are very different) but this is a practise used across jurisdictions across the western world. In this case the distaste generated by a decade of no pay increases and the contempt for the Boeing board and its managers made a strike vote almost inevitable.

    • @David

      I appreciate the international insight. What I have observed from labor negotiations in the US is that typically negotiations go down to the wire and then whatever is the BAFO from management will be presented to membership for a vote. It will be usually come with a recommendation of yes or no but I suppose it could come with no recommendation. Had the IAM negotiators had a better read then they certainly would have presented this offer with a “no” recommendation. The rank and file are still free to vote either way and I have seen examples where contracts are approved with a “no” recommendation. A misread in the opposite direction.

      There is no obligation on the union negotiators to bargain under the existing contract terms until they come to an agreement. When the clock runs out, they have the discretion to continue negotiating, but no obligation.

      Now that they are in a strike situation the union management is the gatekeeper before any new offer is voted. Management may make an offer but leadership of the IAM is not obligated to bring it to a vote.

      These are my observations and i make no claim to be an expert on labor affairs and protocol.

      The courts will be loathe to intercede in and order arbitration or delay a strike unless there is an obvious reason to believe bad faith negotiations occurred. Such actions usually occur when (I believe) the Railway Act is invoked to stop a work stoppage for a “critical function” of the economy.

      • Taking an offer to the membership with a recommendation to reject is fraught with issues for a union leader (and I would add that reading at a distance at the highly unusual pattern of two immediately successive votes in the Boeing case I am not even sure they could). It would only work in a case like this if it was possible to demonstrate that the board had flatly refused to adopt any improvements in the issues that were NOT included in the proposed offer. I am also not sure that in the US case that the courts could act IF the matter was already before some quasi-independent board or resolution mechanism.

        But I cheerfully accept that the mechanisms in the Seattle case may and probably are different to those I have some expertise in elsewhere!

        • @David, regarding practice and custom in US labor negotiations:

          In 1999, SPEEA negotiators lifted Boeing’s bad offers (engineers and technicians conduct coordinated bargaining for the two bargaining units), brought them to the membership with a unanimous recommendation to reject, and the members rejected the offers by 98% and 99% .

          With the second offer, both negotiating teams recommended (not unanimously) accepting, and the members rejected the offers by a tiny margin, triggering a 40-day strike.

          On the third offer, both negotiating teams thought the terms were insulting and didn’t bother bringing that offer to a vote of the members. To David’s point, that involved a small risk that Boeing would file an unfair labor practice charge, but in America, ULPs pile up to the end and are usually withdrawn in the strike settlement agreement).

          The fourth offer was lifted with recommendations to ratify, and both contracts passed.

      • As a note of fact, the Railway Labor Act covers the railroad and airline industries. All other labor law comes under the National Labor Relations Act.

        • @Thomas

          Thanks for the clarification…didnt feel like doing a google search

          Railway Act applies to railroads (and airlines oddly enough). Must have something to do with essential “transportation” from 100 years ago.

  3. Haha, is this CFO West’s dig against Dave??

    “Being from the industry and knowing the company, his instincts are spot on.”

    • sucking up to the new guy hoping he doesn’t get replaced when the new guy starts to bring in “his guys”

  4. I would have thought the concern for cash would have been best applied before leveraging planes through production to be finished out of station. That should have been a clue that big money was at risk.

  5. One of the very best ways to cut costs is to eliminate the need for rework. Right now, as I have pointed out several times, Boeing’s actual commercial airplane production rate on every last line is zero, and has been for quite a long time. When a plane comes off the line it is NOT ready for the Flight Test and Delivery org to fuel it and start taxy tests. All deliveries are being made from stock that has gone through massive amounts of post production cleanup.

    The next thing to tackle is getting rid of the concept of lean as a thing you do. Lean is a result not a process. The activity is that creates a lean system is something much more akin to choreography. That takes a high level of communications and trust. When something isn’t ready to be advanced to the next step in a process, you stop and make it right. Things advance when they are ready. That requires transparency from top to bottom, and right now the management culture from top to bottom is best characterized by CYA and hiding any issues. That drives cost in a massive way, and is a huge drag on quality and process flow.

    To get there, Ortberg probably needs to replace every E-Series manager, since all of the got to where they are in an environment of CYA, hiding stuff, and outright lying about even little things.

    As for the lost knowledge base, they have been hiring back a lot of experienced production people, but they also need to bring back some good experienced engineers and members of the professional staff. They probably would not have to hire them outright. Maybe just offer some future pension bennies that are earned based on time spent. Then setup mentoring teams of these retirees. Have them teach sessions, maybe in short seminars on the job or a few hours each week. A call for volunteers to do this would get hundreds if not thousands of volunteers.

    After the election, he needs to go to Congress and negotiate a bailout. The debt hole that has been dug is only going to get filled if he stops digging it deeper. As for how Congress should respond, well the price should be high. Model it after the GM bailout of 2009, but with one HUGE difference.

    Re-charter the company with a national charter. The whole Delaware process nonsense should have no part of anything Congress puts a dime into. Have some very strict governance rules and actually require a license to sit on a board of a nationally chartered company, with some very strict ethics requirements to get such a license and retain it. Heck we require young women opening a shop to paint nails funny colors. Something as critical to the nation as overseeing the governance of a critical national corporation is surely more important than that. Get rid of the unqualified frat boys.

    • The only realistic thing you stated is that there will most likely be a bailout, GM style.

    • “After the election, he needs to go to Congress and negotiate a bailout.”

      aka subsidy How will that fair in future subsidy discussions when Airbus launches their new single aisle aircraft in the 2030s

    • One of my buddies is a retired first level engineering supervisor. About a year ago he was contacted by Boeing asking if he would be interested in returning as a paid part time mentor. He expressed interest and it was moving forward but at some point the plan died for lack of budget.

  6. What am I missing here?
    Normally the union members vote for a strike,but don’t actually go on strike immediately,its just a declaration of intent.How have Boeing and the union leadership got themselves into this destructive mess so easily?

    • @grubbie – you’re thinking of a strike “sanction” vote. The vote to strike is often linked to the vote on the contract.

      • I also am no expert but the Union took a strike vote authorization a while back.

        They clearly then voted against the contract and for the strike to begin.

        • @TW

          Those strike authorization votes are generally a ceremonial vote. They always pass close to 100%. It doesn’t really matter until the actual conract vote comes up.

          • Casey:

            I will take your word for it, its been a long time since I was involved in a Union action (run over by one yes but that is a non related story)

            Regardless, contract was turned down and by an equal amount a strike was voted on.

            Here forward its how it plays out. Shrug. I have no insight into what will happen, just a range of possibles and in that case, just stand back and see how it plays out.

  7. “On the 777X, as reported, we discovered damage on one of the thrust links on the flight test aircraft and immediately paused the flight test program. ”

    No, Brian: there were *multiple* damaged thrust links on *all* of the test aircraft.

    —

    “The team is well underway to work out those next steps. We have to give the team time to assess the situation and then a path forward.”

    Translation: the team is clueless as to the cause, and even more clueless as to the solution. Currently no idea as to how/when this issue will be resolved.

    —

    Thanks for the “update”, Brian, but we’re not as dumb as the BA board seems to think/hope we are.

    • @Abalone

      Was not even aware that Boeing had been making 777X intended for customer delivery but i think i saw something like 19 already in various stages of inventory. I would presume those all have the bad link design. Every last 777 in WIP will need to go through rework to install whatever the design link fix is.

      • Yes, the original idea was to have a mini-fleet of 777Xs already manufactured, so as to facilitate rapid initial deliveries to customers “once certification is in the bag”.

        Well, that turned out to be a brilliant idea, didn’t it?
        Those frames are now years old — and, as you point out, will need to be modified.

        • This has been standard practice at Boeing for decades. Its the Change Incorp & Refurb programs. The launch customers get a discount on these aircraft due to the rework.

      • Few if any of the stored 777X aircraft have engines installed, meaning they also have no thrust links installed. So there’s one piece of rework avoided…

        • …unless it’s decided that modifications are required to the part of the wing to which the thrust link is attached…

          • The thrust links don’t attach to the wing. They attach to the aft engine mount, which attaches to the pylon,which attaches to the wing. But by no means do I claim that this is not a serious FUBAR issue.

          • @Bigfoot analysis and tests might very well reveal structural issues in the wing that ultimately snapped the link, and thus requires some re-design to the wing structure.
            We will know, but it might take years for the details to be disclosed.

          • A more logical split would be that this engine mount would be GE responsibility attaching to the Boeing pylon. The loads both mechanical and thermal comes from GE. But that would make a whole team at Boeing cut to 1/3 of present size if all engine manufacturers had the same spit line of responsibility.

        • That whole 777X thrust-link story feels very “off”, to me.

          YMMV.

          • Well, we haven’t had any (credible) damage control messaging pointing a finger at sub-spec materials — which therefore suggests a fundamental design failure…quite a monumental one at that.

            I’m not surprised at all: that fuselage rip during the wing load test was an indication of further serious shortcomings yet to reveal themselves…such as the uncommanded pitch event that precipitated a major software re-write. I bet that plane is full of gremlins.

      • The original Thrust Link reports were it was a structural issue. That was very wrong.

        They are actually designed to fail such that an engine issue causing severe stress they tear off and the engine drops off.

        Obviously they should not crack in normal service and its s serious issue for a compressor stall which should not take one off either unless the stall got past the break point.

        A thrust link (two per engine) is a stand alone part.

        You can pull one and replace it in short order.

        Its not a a deep problem though it does take time to analyze what was wrong with the design details or even the heat or form treatments, metal mix and was it the right mix.

        If it was an early build issue that was corrected (not likely but possible) and has been corrected then good to go.

        Works case you correct the issue and pull and install the new ones. Its open access so not an arduous process.

        They have time to fix it, testing is delayed unfortunately.

        • No, thrust links are absolutely NOT “designed to fail such that an engine issue causing severe stress they tear off and the engine drops off”. There are fuse pins in the engine mounts which serve that purpose, but that is not a function of the thrust link.

  8. “And our CEO [Kelly Ortberg] went right to the factory floor. He’s been out there all week listening firsthand to the feedback of our employees.”

    In that case, he must have a different definition of “listening” — because he *completely* failed to accurately judge the shopfloor sentiment.

    —

    “Kelly’s already at work to get an agreement that meets and addresses their concerns.”

    Really?
    So that means that Kelly is now ready to “sign on the line” and give the union what it wants? Or is he continuing to play games?

  9. “Our immediate focus is to be laser-like focused on actions to conserve cash, and we will.”

    You mean like BA’s previous claims that it was “laser-focused” on quality?
    Apart from that: no detail whatsoever as to how cash is going to be conserved? Gosh, that will really appease investors!

    —

    Brian: “Kelly , I have a great idea to conserve cash!”

    Kelly: “Do tell!”

    Brian: “We fire all our QC staff in Charleston — that will save us a bag of money!”

    Kelly: 🙈

    • @Abalone

      Would think the first thing to happen is to invoke “force majeure” to stop accepting any new supplier material

    • “Our immediate focus is to be laser-like focused on actions to conserve cash, and we will.”

      Does Boeing Renton really need to currently spend $115m to replace 6 existing wing riveters with 6 new wing riveters. The replacement is a not rate increase. You can get away with $10-15 million in the next 5 years to maintain the existing ones……….that’s eliminates $100 million of outgoing cash

  10. 787 also affected:

    “While Boeing’s non-unionized 787 production site in North Charleston, South Carolina continues to operate, the company faces challenges in meeting its goal of increasing 787 production to five units monthly by year-end.”

    “The strike will impede deliveries of previously produced 787s, as Chief Financial Officer Brian West explains that final work on these aircraft occurs in Everett.”

    https://aviationa2z.com/index.php/2024/09/14/boeing-machinist-strike-stops-737-max-and-777-production/

  11. You have to hand it to Boeing — they really have a stunningly in-tune PR department 🙈

    So, while striking workers are out on the picket line — fighting for their first remuneration/benefits adjustment in 16 years — details emerge of Kelly’s new, multi-million dollar mansion in an upscale neighborhood of Seattle:

    “On The Move: Boeing’s CEO Buys $4.1 Million Home In Seattle”

    “The home is in the Broadmoor neighborhood of Seattle, a gated community sandwiched between Washington Park Arboretum and Madison Park.”

    “The four-bedroom home is 4,180 square feet and costs $4,212,580 after taxes. It was built in 1926 and is impressively 96 years old. The house also has five bathrooms, three fireplaces, and many patios—the entire lot measures 9,217 square feet.”

    https://simpleflying.com/boeing-ceo-home-4-million-seattle/

    —

    Congratulations, Kelly — sounds lovely!
    Now, try to keep a straight face next week while you tell your enraged workers that there’s no money to give them what they’re asking for.

    Re-cap: Kelly’s salary at BA will be $1.5M, with an annual bonus target of $3M…plus an incentive award target of $17.5M in stock, vesting over three years.

    • That was probably out of hus own money if his salary is just $1.5M a year though. And at Seattle housing prices a $4M house is not that hugely out of the local market range. Like, there are unremarkable $1M homes in Bothell.

    • Housing- whether buying or renting- is absurdly expensive here in the Exceptional Nation (healthcare, too). $4.2 million is not excessive at all; in fact, it’s relatively humble for those of that ilk. Funny ol’ world.

      I’m still hoping that Ortberg turns out to be OK+. We’ll see.

      • I understand your point entirely as regards people “of that ilk”.

        On the other hand, the median sale price of a house in Seattle in 2024 is $711K — so Mr. Ortberg paid 6 times that.

        I don’t care what he does with his money — I’m just pointing out that this is rather an inopportune moment for such news to be surfacing, in that it draws unwelcome attention to the financial contrast between “management” and the shop floor.

        https://www.realtor.com/realestateandhomes-search/Seattle_WA/overview

        • Agreed that it’s not a good look at this time. Doesn’t he have underlings to cover this stuff? 😉

          The social stratification makes my stomach turn, btw.

    • Does anyone else wonder if that stock option will be worth anything by the time it vests? This is the first I’ve heard all through the comments of Boeing executive class taking a hit in their wealth from their mis-management of production. Too bad they decided to tank the whole company trying to hold on to their undeserved compensation.

    • Ortberg’s “benefits package” (god, I hate euphemism) does not seem excessive to me right now, esp compared to his dismal, house-wrecking predecessor’s.

      I am rooting (foolishly?) for the guy, and we’ll have to see what happens over a bit of time.

      • That is a great statement.

        I would rather have hope than Calhoun.

    • Not to worry — prosperity is just around the corner.
      Any day now, the cash will come pouring in…

      • Yup. Almost exactly what West said. Hang on there, the future is bright once BDS gone thru all those money-losing contracts.

  13. Thinking about it more: IAM 751 should *require* a seat on the Boeing BoD as precondition to any contract. Gotta have a seat at the table- esp
    with an outfit that’s in such dire, self-inflicted straits.

    • @ Vincent
      I agree.
      The board presence of someone who doesn’t live in an alternate reality might help steer the other buffoons along a somewhat more realistic course.

      Certainly can’t do any harm. However, I can imagine that the rest of the board is vehemently against it — after all, it wouldn’t be nice if their day-to-day incompetence and self-enriching escapades were put on direct display to someone from the outside world.

  14. Federal mediation in negotiations:

    “Boeing and union negotiators are to return to the bargaining table next week, in talks overseen by U.S. federal mediators, after more than 94% of workers voted to reject an initial contract offer that Holden had endorsed.”

    —

    Crux of the matter:

    “Holden said the priorities for his members were a bigger wage increase and the restoration of a defined-benefit pension scheme that the union lost during a previous round of negotiations with Boeing a decade ago.

    “”We have the most leverage and the most power at the most opportune time that we’ve ever had in our history, and our members are expecting us to use it,” Holden told NPR.”

    “Union members, venting frustration at years of stagnant wages and rising living costs, said removal of a performance bonus in the Boeing offer would erode half of the headline salary increase.”

    https://www.voanews.com/a/boeing-strike-could-last-a-while-workers-confident-of-higher-wages-union-says/7784821.html

    • “We have the most leverage and the most power at the most opportune time that we’ve ever had in our history, and our members are expecting us to use it,” Holden told NPR.”

      Not if Boeing goes Chapter 11 bankruptcy, the new company can throw out the existing contract and maybe negotiate a new one with IAM

      Do you really need 33,000 IAM workers to produce the current 20 737 a month?

      • Reality will be setting in this week when discussions around the kitchen tables will be happening on how to cover monthly costs The $250 a week strike fund after taxes will cover about 75% of the healthcare bill for the month. What about the mortgage, truck/auto payments and food? Most likely IAM pay grades 1-5 live week to week on paychecks while the grades 9-12 have stored some strike fund reserves. Rally in the alley standing by the burning strike barrels will soon wear thin

        • Stop adding reality to the discussion David, stop it right now.

          Now back to unicorns and rainbows.

          • “Now back to unicorns and rainbows.”

            You mean like the totally inaccurate, meaningless crap being spouted by Dave and Brian for the past few months?

            “Laser-focused”…?
            “Cashflow-positive”…?
            “Certification late 2024″…?

            Seriously?

          • If there is no money what is the point?

            Unicorns and Rainbows. Apparently you live there too.

      • just a fyi…Airbus Mobile…three FAL (two A320 and one A220)..call it 16 a month rate) with only 2800 production workers…. They assembly fuselage sections and have the wing shipped to Mobile Renton has a complete fuselage shipped to them and makes the wings

        “As of October 2023, Airbus’ Mobile, Alabama manufacturing facility is expected to employ 2,800 people after the completion of a 1,000-worker expansion project.

    • from the article

      “Cai von Rumohr, an analyst with TD Cowen, takes a different view.
      He expects the strike will continue, likely stretching to 50 days.”

      Boeing says it made a historic offer with the “largest-ever” general wage increase. Union members say it’s not enough.

      Now, von Rumohr said, “it’s a question of who’s going to blink first.”

      • “Cai von Rumohr, an analyst with TD Cowen, takes a different view.
        He expects the strike will continue, likely stretching to 50 days.”

        Nah, the stonk hasn’t tanked, yet.

  16. Looking for a comment from the rank and file: Would the likelihood of a settlement increase (or the chance of a strike decrease but it’s too late for that) if the Boeing execs would just stop running the company into the ground while paying themselves handsomely?
    It seems to me that the rank and file do feel a sense of ownership and really resent the mishandling of the company by the execs. They are tired of carrying the company while the execs continue to pay themselves well for driving planes, and the company into the ground. Is there any truth to this?

    • Wondering what the vaunted-by-some Boeing “FCF” will be in the foreseeable future. “Almost there!”

      What an outfit.

      • It will be negative: no earnings, and the deposit/PDP gravy train is only inching along.

  17. Here’s a scary thought.

    The Seattle Times recently reported on the total chaos on the 777 production line — including a regular practice of swapping parts out of other frames without (properly) recording the swap in the production log — thus rendering it unclear which frames contained / didn’t contain what parts.

    Imagine what the chaos will be like when work resumes at the strike-afflicted plants — featuring tens of aircraft of different models that have undergone a manufacturing interruption of several weeks? Will there be any per-frame record of work already done and work yet to be done?
    Almost certainly not.

    Will manufacturing continue anyway, with an attitude of “just ship it”?
    Very possible.

    # Tempting Fate

    • Any issue afterwards is definitely the union’s fault, according to our poster here.

  18. Out-of-touch Steph and Kelly added fuel to the fire:

    “Two days after Boeing announced its offer, as union member frustration seeped into the media, commercial planes chief Stephanie Pope wrote an open letter to workers, saying the company had held nothing back and this was the best deal they would get.

    “CEO Kelly Ortberg followed up with an open letter the next day, telling workers that voting against the deal would send them down a path “where no one wins”.

    “Rather than rallying the troops, the letters backfired, according to four workers who said many union members saw them as ultimatums.

    “”I thought they were unprofessional and threatening,” said Josh King, a quality control inspector at a Boeing Seattle factory.”

    —

    Fake offer regarding NBA:

    “Workers were also suspicious about Boeing’s commitment to build its next commercial jet in the region because it came with a clause: it was contingent on the plane programme being launched in the next four years, something that isn’t guaranteed, the factory staff said.

    “”That was a fake offer,” said David Hu, a 35-year-old quality inspector.”

    —

    https://finance.yahoo.com/news/boeing-strike-bosses-bruised-blindsided-100224225.html/

  19. Boeing is in a very weak position in terms of product portfolio, productivity, 10 year outlook and bank account. The Civil as well as Defense and Space sites of the company.

    Ignore it because of the damaged management-workers relationship, short term capitalism of the board, history, but the problem still isn’t going away.

    ROW is considering: will US government safe Boeing somehow? While Unions seem to have an entirely different perspective, not survival.

    • Regarding your bailout question:
      The US federal government is, itself, drowning in debt — with continuing, out-of-control budget deficits of the order of 6-7%. Annual interest payments now top $1T — a 30% increase over the past year.

      Meanwhile, bond experts are worried that, when US interest rates start to finally decline, there’ll be less appetite for US treasury offerings — with mass unwinding of carry trades that have propped up the dollar for the past 2 years.

      So, even if he wants to intervene to save BA, Uncle Sugar may find his resources stretched…

      • Yet the world turns to the US when world situations arise and not the EU.

        • Williams, a view based on filtered information we get from sources we select, financed by satisfying, confirming our preferences and ideological, cultural foundations. Others just don’t understand / see it wrong.

          • Trust me Keejse, my view is based on reality.

            https://www.usdebtclock.org/world-debt-clock.html

            Its a debt that will never be paid off unless one believes in the Great Reset liberal theory.

            Despite what is posted in a comment section, the reality is the UN and most of the world look to the US when world events happen. Don’t get me started on Ukraine.

            Keep holding out for BRICS to be the next world power.

        • @ Williams

          Explain to us how the “world turns to the US”. And try to keep it recent…no point in going back to 1944.
          As far as I can see from recent press, the exact opposite is true: 80 countries seeking to de-dollarize, virtually the whole Middle East looking to China, a huge portion of ASEAN nations wanting to join BRICS…time to wake up and smell the coffee.

          Also, explain why such a scenario — to the extent that is exists — is in any way related to the lack of fiscal discipline in the US. After all, simply raising taxes to levels commonly found in other countries would quickly solve the problem.

          • When the EU takes point on Ukraine, you let me know—one example.

            I have been reading about BRICS for the last decade. Oh, it looks good on paper, two of the most populous countries teaming up economically. But until they start trading in Yuans let me know.

            Countries supporting the UN. Financial support
            United States (27.89%)
            China (15.21%)
            Japan (8.56%)
            Germany (6.09%)
            United Kingdom (5.79%)
            France (5.61%)
            Italy (3.30%)
            Russian Federation (3.04%)
            Canada (2.73%)
            Republic of Korea (2.26%)

          • @ Williams

            That’s it? That’s all you have?

            The EU is supplying billions of euros worth of arms to Ukraine — aswell as looking after 6 million Ukranian refugees within EU borders. EU leaders have also been far more proactive in pushing to supply Ukraine with fighter jets and (European) long-range missiles. You do realize that Ukraine isn’t in the EU, don’t you?

            Contributions to the UN from the EU as a whole amount to 30% — more than the US.

            Laugh at BRICS if you want — but the bloc is keeping Janet Yellen awake at night:

            https://asiatimes.com/2024/07/yellens-de-dollarization-fears-will-only-get-worse/

            Anything else?

            And, once again: what does this have to do with the out-of-control federal debt in the US?

          • I wonder why??

            “The Saudis have joined other Asian countries in ditching their long-term sensitivity to the gold price. Evidence suggests the Saudi central bank has been covertly buying 160 tonnes of gold in Switzerland since early 2022”

            “Although the Saudis played a key role in the birth of the global dollar standard in the early 1970s, this time around they might even become a lynchpin for its dissolution.”

          • “According to the Social Security Administration trustees, the fund faces a $22.6 trillion shortfall. That’s not just a number – it’s the equivalent of $172,000 for every household in the country. Without significant changes, the Social Security Trust Fund is expected to run out of money by 2035. At that point, benefits could be slashed by 24.6%, leaving retirees in a serious bind.”

            https://finance.yahoo.com/news/22-6-trillion-crisis-neither-140102294.html

          • Ukraine is one example.

            I know Ukraine is not in the EU, nor is it the US’s problem but here we are. $54 Billion and counting.

            I suggest you look at the world debt clock and save your fiscal preaching. Everyone is living off the credit card.

          • @williams
            “I know Ukraine is not in the EU, nor is it the US’s problem but here we are.”

            Ukraine is where it is today because of the US fear of nuclear weapons sold to some nations unfriendly to the US. This resulted in the Budapest Memorandum. The US signed this treaty.

            We know that you can’t trust the lies from Kremlin but what about the US? Can the world trust in the US?

    • @keesje

      First a link to the article Abalone cited earlier
      https://www.reuters.com/business/aerospace-defense/boeing-strike-bosses-bruised-blindsided-brink-crisis-2024-09-16/

      Second forget about paying off the past. The only way Boeing’s product lineup becomes relevant is with investment in new product. This is a company that can muddle through with its current debt load but its a ball and chain they will never lose. In reality Boeing probably needs to launch two new products to address the single aisle (one in the 150 – 200 and another from 200 – 250). They haven’t launched a new product at all since the 787. That’s going to take money they wont be able to get.

      Boeing does not need to be bailed out to launch those but they do need to access debt at rates that are not junk status. For the US government to get involved i would start with them simply guaranteeing the debt like they did with Chrysler with added stipulations that there would be no dividends or buybacks until the guaranteed debt was paid off and that a minimum workshare would be produced domestically.

      Boeing is simply too broke to invest in its future.

      • Since the 1990s, BA has received almost $90B in subsidies, grants, tax breaks and loan guarantees — and look where it is today.

        https://goodjobsfirst.org/
        (…and fill in Boeing in the search box)

        Not sure how your proposal could be enacted under WTO rules…

        • @Abalone

          I really dont disagree tbh. The fairest thing of all is a restructuring. The ones who need to pay are the shareholders. I am stunned the stock price is as high as it is today.

          However, I do stand by my statement that the only way forward is by investing in a winning portfolio of product. Last time I checked Boeing indicated not until 2030 and then it would only take 5 years until EIS. This is the world’s slowest train wreck.

          • Do you think that Boeing still has the ability to design and realize a new plane?

            I certainly don’t — just look at the massive braindrain that it has suffered.

      • @Casey, I hope the union leaders and Boeing employees realize the seriousness of the situation. They can destroy their own jobs / family incomes regardless of any past, current or future management. And it’s real, not fake.

        • @Abalone / Keesje

          Killing two birds here
          Boeing doesn’t need one new plane. It needs two. Something it hasnt really done since the 80s. Do I think they can certify a new plane? Yes i do. Sometimes warming over an old design is tougher than starting with a clean sheet of paper. You don’s have that old baggage. Can they certify a plane in 5 years? No. Do they have a choice to launch? Not really. The rest of the world is not standing by to let Boeing play catch-up on its debt.

          Union negotiations
          Be mindful of Pyrrhic victories. It’s not really a victory. The union is being asked to take it on the chin for a decade’s worth of bad decisions in which they were not the beneficiaries. The people at the top crying poverty have not seen the price of groceries in years. It rings hollow and it’s insulting.

          However the damage is real and the trust is broken. For the union to agree to less than they are demanding they are going to want some hard guarantees about job security, and no dividends or stock buybacks, and executive compensation limits. Sacrifice doesnt mean much if it only comes from one side. If I was the IAM I would also demand an opt-out clause after 2 years. I sort of agree that 40% raises are a recipe for eventual insolvency. The aircraft in the next 5 years of backlog are already baked as far as pricing.

          I keep harping, but I really don’t see how this accumulated debt gets paid off. It’s not the union’s job to pay that debt by taking an offer that is convenient for management.

          • In good times, mgmt forced concessions from workers in 2008, 2011 and 2013/14. Mgmt pushed PFS onto suppliers to create a gush of “FC” and used that for share repurchases. Now workers are told to bare the brunt again because the co has been mismanaged for more than two decades and accept sacrifice for the good of “stakeholders”? When is the right time for “stakeholders” to step up and accept their share of responsibility/blame??

          • Last paragraph can be said of GM in 2008. UAW saw and felt how well that worked.

          • @williams
            Not too bad. Pension of UAW workers & benefits of the retired are safe. UAW is TBTF! Hehe.

            That’s a good lesson for IAM members IMO.

        • You are being logical. This is an emotional issue.

          A couple of weeks need to go by.

  21. And then there’s this:

    “Boeing to Pay Embraer $150 Million for Scuttled Combination”

    “(Bloomberg) — Boeing Co. will pay Embraer SA $150 million for its failed combination with the Brazilian aircraft maker, forcing the US company to hand over funds at a time when it’s trying to prop up its balance sheet.

    “The arbitration proceedings have ended and an agreement been reached, Embraer said in a stock exchange filing on Monday. Boeing walked away from the proposed $4.2 billion transaction at the height of the Covid-19 pandemic. ”

    “A combination with Embraer would have given Boeing access to the Brazilian company’s engineers to design a new, mid-range jet family as well as its existing range of smaller jets that compete against arch-rival Airbus SE’s smallest A220 model. The termination of the deal came at a time when Boeing’s then-Chief Executive Officer Dave Calhoun said the company would need to adjust to a “new reality” as travel demand collapsed and airlines expected a slow recovery. ”

    https://www.bloomberg.com/news/articles/2024-09-16/boeing-to-pay-embraer-150-million-for-scuttled-combination/

      • As I recall, Boeing was looking at government support but turned it down.

        They then borrowed 13 billion and spent it on a dividend.

        Stupid decision, actually insane but its shows you how out of touch Boeing was.

        Well seeing as how they were gober smacked by the strike vote, still are. Obviously a segment of the board that did not get it.

        How much Ortberg got say in is ???????????

        Union also recommended it and that smacks of out of touch as well.

        • “Union also recommended it and that smacks of out of touch as well.”

          The union agreed to the last two contracts…no redo…25% increase for 4 year deal is pretty good compared to the rest of the US which will be 12-16% for the same period Where is IAM national in all of this?

          “Stephanie Pope wrote an open letter to workers, saying the company had held nothing back and this was the best deal they would get.”

          I wouldn’t take this statement to lightly, might be putting IAM on notice so when Boeing files for C11

  22. Wrecking ball! Perfect time to wreck its supply chain.

    “Boeing CFO Brian West issues a companywide memo detailing the steps it is taking conserve cash during the IAM strike. Its austerity measures will *reverberate across the aerospace industry and broader U.S. and global economy*.
    Memo:
    https://pbs.twimg.com/media/GXm2pnCWsAArcIm?format=jpg&name=large

    https://x.com/jonostrower/status/1835699156830007404

    https://www.bnnbloomberg.ca/investing/2024/09/16/boeing-freezes-hiring-considers-furloughs-after-workers-strike/

    • Will the board be required to stop private use of BA’s corporate jet fleet?

      That would save a lot of money!

      • Exactly! Is West going to ditch business jets for flying in economy like other workers?? Mothball the fleet of BJ and forlorn the crew certainly would set a good example in “difficult” times and send out positive signal to workers.

    • @ Pedro

      The timing is epic. You didnt furlough your employees when you lost the first $40 odd billion (or whatever it is now), but you will do it because of the strike. Maybe someone thinks that this will put the rest of the Boeing workforce against the union. In reality, if they pull a furlough you will pit “everyone” against management.

      Ortberg will end up reviled worse than Calhoun

    • aka Stage 1 Pre-Bankruptcy……..
      save cash and furlough employees across the board (maybe some time work share program with Washington State- -employees work reduced hours while collecting some unemployment benefits, allowing businesses to save money and retain knowledgeable productive staff).

      Cut suppliers from making shipments and stretch payments for accounts payables to 120-160 days

    • Laser-like focused … turned into WMD?

      ‘On Monday, Boeing laid off dozens of engineering contractors, experienced retirees who had returned to help solve problems on the 777X, 737 MAX 7 & MAX 10 and 787

      That’s work unaffected by the strike.

      “It’s nothing to do with not being needed. It’s all about saving cash flow”

      https://x.com/dominicgates/status/1835848252606104031

  28. Oh dear:
    “US FAA chief to testify before Congress on Sept 24 on Boeing quality plan”

    “”This is a very long term journey for Boeing. I think it’s going to be measured in years not months,” Whitaker told reporters last week in Washington. He said he plans to visit Boeing in Seattle to meet with Boeing CEO Kelly Ortberg as soon as later this month.”

    https://finance.yahoo.com/news/faa-chief-testify-sept-24-204646640.html/

    —

    “Years, not months”

  30. “Boeing, union negotiators to meet as striking workers dig in”

    “SEATTLE (Reuters) – Negotiators at Boeing and its largest union are due to resume talks over a labor contract on Tuesday, as the planemaker seeks to bring a swift end to a strike that is costing the indebted company an estimated $100 million a day.”

    “The top negotiators at Boeing and the International Association of Machinists and Aerospace Workers (IAM) will meet with federal mediators in Seattle on Tuesday for preliminary talks, a person familiar with the process said.

    “Boeing and union negotiators are not expected to discuss details of a new offer at the meeting, which is more about setting out the rules of future talks, another source with knowledge of the mediation said.”

    “”It makes me a little happy to see that they’re showing the first signs of struggling because I don’t think they care about their workers at all,” said Martin Klyavkov, 20, who works building wings for Boeing’s best-selling 737 MAX.

    “”Boeing is going to get desperate one of these days and cave.””

    “Klyavkov and several other young Boeing workers told Reuters they were getting part-time jobs as food delivery drivers to supplement the $250 a week the union will pay them during a strike, starting in the third week.”

    https://finance.yahoo.com/news/boeing-union-negotiators-meet-striking-100216379.html/

    —

    $100M per day!
    And even before the strike, BA was burning through $1B per month.
    There’s free cash flow for you…freely flowing down the drain…

    Meanwhile, employees are openly expressing glee at BA’s suffering 🙈
    What a toxic working environment — diligently created by Dennis and Dave…

  31. Thanks to those who are talking about BRIC, Ukraine, Russia, etc., comments are closed. These have nothing to do with this post.

    Hamilton

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