Leeham News and Analysis
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Leeham News and Analysis
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- Strike slows Boeing’s march toward improving safety culture October 7, 2024
- Aerospace supply chain still ailing; Sustainable Aviation Fuel isn’t the answer to go green October 4, 2024
- Bjorn’s Corner: New engine development. Part 27. Long developments October 4, 2024
- Longshoreman strike adds to Airbus, Boeing woes October 1, 2024
Ortberg’s honeymoon with Boeing’s labor unions is over
By Scott Hamilton
Analysis
Sept. 24, 2024, © Leeham News: That was a short honeymoon.
Kelly Ortberg, CEO of The Boeing Co. Credit: Boeing.
The desire of Kelly Ortberg, the new CEO of The Boeing Co., to reset labor relations with its largest union came to a crashing halt
yesterday. This is a mere six weeks after his appointment, on Aug. 8, to succeed David Calhoun, whose four and two-thirds-year tenure was marked with one failure after another.
Boeing’s largest union, the IAM 751 with 33,000 members, delivered a thumping to the company on Sept. 12 when 95% of the members rejected what Boeing claimed was its best contract offer ever. Ninety-six percent of the members concurrently voted to strike at midnight. They were walking the picket lines when Boeing issued its Best and Final Offer (BAFO) on Sept. 23. The offer sweetened the pot in some key areas.
But how the offer came about and was delivered incensed union members, who rejected the original offer in large part due to 16 years of pent-up anger and resentment over stagnating wages, reduced benefits, and elimination of a defined benefit pension plan. The union concessions were made under threats of locating the final assembly of the 737 MAX and 777X outside the greater Seattle area.
In preparing and presenting the BAFO, Boeing ignored the IAM’s negotiating team. Two days of talks under federal mediation failed. The IAM complained that Boeing refused to return to the negotiating table. (On Sept. 13, the day after the original contract was rejected and the strike began, company CFO Brian West said Boeing was anxious to resume negotiations.)
Boeing released details of the BAFO to the media before presenting it to 751 President Jon Holden. The union later released a scathing statement rejecting the offer and Boeing’s demand for a member vote by midnight Friday, Sept. 27.
Union Statement
In a lengthy statement, the union said, “Let us be absolutely clear: THIS IS A NON-NEGOTIATED OFFER from Boeing. Your Negotiating Committee did not have any discussion or input on this offer. We have said all along that the Union would be available for direct talks with Boeing or, at a minimum, expected to continue mediated discussions when the company was ready. These direct dealing tactics are a huge mistake, damage the negotiation process, and attempt to go around and bypass your Union negotiating committee.
“Mediation broke down on Wednesday, September 18, 2024, after the company refused to make an offer that addressed the priorities of our membership. This proposal does not go far enough to address your concerns, and Boeing has missed the mark with this proposal. They are trying to drive a wedge between our members and weaken our solidarity with this divisive strategy.” (Emphasis in the original.)
Nothing infuriates parties more than a sense of disrespect. The Seattle Times reported that Ortberg was “heavily involved” in structuring the BAFO. He’s going to be blamed by the union for the lack of negotiations and how the offer was delivered.
Ortberg came under criticism from the union for the first offer, but as he had been on the job only a few weeks, there was some room to give him some leeway. How Boeing handled the BAFO, however, wrecked any benefits of the doubt that may have existed.
The honeymoon with labor is over.
The honeymoon never started. They were going to strike anyways.
The honeymoon term refers to Ortberg…not the union.
His promise to “reset relations” was a farce, it would seem. As far as I can see, he hasn’t even tried.
“Ortberg came under criticism from the union for the first offer, but as he had been on the job only a few weeks, there was some room to give him some leeway. How Boeing handled the BAFO, however, wrecked any benefits of the doubt that may have existed.”
Let us stop playing naïve. The union was not going to consider it a reset unless they received everything they wanted. And even then they would still walk because they were pissed at previous management.
Once again: the article above relates to the indelicate manner in which Ortberg handled the matter — regardless of the actual details of the matter.
He’s just succeeded in pouring oil on an existing fire.
And, once again: giving in to the union would have been a cheaper option than the current path. Already more than $1B burned since the start of the strike, and still rising.
I guess that’s a good thing. Burning money. And when Boeing don’t have the money anymore. The Union still will demand more money.
I’ve been with Boeing since 1987. When we learned how the top six company executives receive over 75 million a year and are the same people responsible for killing our company and its reputation for highest quality and safety. Then turn around and say that they cannot afford to bring back the pension. Well Barbra Streisand to that.
+ 1
I love the headline: The Honeymoon Is Over … Maybe the New CEO should show us His Contract!!!
This is the great stain of how American corporations are run. For the benefit of upper management above all else.
Don’t forget all the billions squandered on share buybacks. All the while management was pleading poverty and cutting budgets for projects and benefits for employees not in the C-suite. If that doesn’t destroy trust, then nothing will.
Yes well said it’s all about shareholders nothing else .yr just a number fact
Wake up it is all a staged/calculated show to get them to “legitimately” file bankruptcy, restructure the company and shaft a whole lot of creditors so the execs can keep lining their pockets!
The IAM members have completely lost their minds. This is the richest offer I have ever heard of for any union anywhere period. [Edited as violation of Reader Comment Rules]. If anyone in any other place in this country were to get this percentage of increase in the key areas that this offer provides, they would be dancing the happy dance. But not you [Edited], you would rather stick another dagger in the company that has provided you with a very good living while it is in serious trouble. Stop being caught up in the hype and greed and mob mentality and instead work to save your company by working with them instead of against them! You need to let go of the past that you were part of and deserve at least as much of the credit or fault as the company leadership does. Vote to accept this incredibly generous offer, go back to work, and help make Boeing Great Again.
It blows my mind how hung up the union is on pensions. 401k’s are superior to pensions in nearly every way, especially given the matching contributions Boeing was offering. Pay and other issues aside the retirement portion of the latest offer was phenomenal. Complaining about it will come off tone deaf and lose you support in fixing other issues.
Not if they gave a real offer. The union told the employees to accept the offer.
I disagree, the business was just way too far from our (the members) expectations and what a lot of people don’t know is that the offer created new disciplinary actions that are not realistic, we want those removed, we are actually close but they think its all about pay and they have already offered enough of that for us but took so many other things away and added garbage.
The union are a bunch of lazy chumps , they don’t care about their quality of work , I been in the union once , saw what they did and didn’t do .. been on job sites where they called working people scabs because they were working .. if I was the CEO I would move everything to South Carolina, not taking one person from Seattle… they have about ruined that company!!No work ethic no pride .. I would love to be the company negotiator !!!!
Tom, are you aware that every plane built in SC has to be flown to Everett so Union mechanics can fix them before they are delivered to the customer? Are you aware that the quality issues with airplanes are due to cost and corner cutting by the Executive Leadership over the last 20 years? Are you aware that the Union and Boeing worked together for decades while producing HUGE profits? Are you aware over the last 10 years Boeing has tried to remove the quality assurance inspectors from the building process twice and it was the Union that stopped it? Are you aware of any of this? Obviously not.
The working class at Charleston had to play catch-up for years because Boeing management had decided to be a final assembly only company. They gave all the engineering secrets to foreign companies that couldn’t build a doghouse to a blueprint.
The airplanes that are now built in North Charleston are of a superior quality to anything falling out of the sky built on the West Coast. I worked for Lockheed as an IAM member and I finished my aerospace career on the 787 in North Charleston.I was proud to be a Boeing #.
They haven’t had a contract negotiation in 15 years! When they took their pensions was very underhanded, the majority didn’t know anything about it let alone vote on it! They are behind on wages, you try living in WA on $28an hour. You’re lucky to find a home that meet a million dollars! It’s not cheap, workers are struggling some have second jobs.
You don’t know ANYTHING about what it takes to build an aircraft. People like you act as if any monkey can do it and THAT is why the company is failing. SC builds barely passable garbage that is STILL being reworked in Everett, until now lol. Just shut up.
Without the workers in Washington the 787 would still be sitting in south carolina without a single flight. Boeing sends the worst managers there to get them out of their hair.
You talk about quality like we don’t care, you should see the amount of rework we do from the south Carolina site! We care about our work and many times have raised concerns which is part of the reason behind our strike. We want quality over quantity and to be protected when we raise concerns!
I’ve been saying the same thing for a long time. The hardest part of this entire strike, is their timing. If Boeing was already back on their feet it would one thing. And truth be told if they would have agreed upon a short term yet satisfying increase, they would be able to barter better down the road. If you look at Boeing’s earning reports for the past few years, they aren’t in a position to be shoveling out a huge agreement. They are getting greedy because they don’t think they can be replaced. Every corporation can walk away from anything if they really want. And moving to a right to work state over time is completely their right. Not saying it would be immediate, but they could easily walk from this entire area with two middle fingers up the whole time. Litigation and legal battles would still be cheaper than putting up with greed. Im a member of different union and I get about $1-1.50 per year for inflation. Not 3. And with our open border policies..even I know I’m replaceable for less. This will be the demise of our country. Just hoped these folks havent over stretched themselves on their mortgage. Because.. that’s the biggest picture here. Who knows what will happen but a lot of home values could go to crap when people can’t pay. And the only jobs being built around here avg 20-25 per hr.
Wow Tom, you almost sound like you work in a cubicle for a living! Must be a Shane you can’t talk back to your boss for fear of being fired because you’re a at will employee. Ad for you talking down on my 33,000 coworkers, what happened to you. Was the buildings to hot or cold? Maybe it was you just couldn’t do what you wanted to do. Your lack of work ethic, and poor qualities that is the reason your no longer at your union job!
Unions work in the rest of the western world put yank land full of what we call scabs,so don’t blame the unions I’ve been both union and non union and non union lose always
Move all of Boeing to South Carolina and Airbus will buy the rest of that former aerospace company for a Dollar within a decade.
There is a little difference between fitting a burger between a bun or fitting two carbon tubes together. I avoid flying airlines with 787.
BA doesn’t have the money to set up multiple new FALs in SC.
Come to think of it: BA doesn’t have the money to do *anything*.
I love the headline: The Honeymoon Is Over … Maybe the New CEO should show us His Contract!!!
I think common held thought is that Boeing is in the position they are in today not because of their workers, but because of their leadership for the past 25 years.
Tom it is not the workers that are ruining the company and yes there is a small percentage of employees that arnt to good at their job but most of us are very good and have learned every aspect of our job. Your saying send it to South Carolina, I know your work heads back to Seattle to be fixed and customers complained about getting planes from South Carolina. Don’t say union members are stupid damn near all of us arn’t. Most of us work hard pay attention to what we are Doing. You hear what the whistle blowers had to say- managers not listening – huge problem and out sourcing is another giant problem.
IAM members want more $ but they sleep/nap most of the time at work. People reported workers come in early just take naps and occupy toilet for hours… No wonder the quality of Boeing products are way down. They save required work until the weekend so they can earn x2 or x3 OT.
Boeing should remove Union and relocate to Texas!!
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Are you able to back up those assertions?
Without the Union membership there’d be nobody saying “Wait! That plane’s not ready!”
“… workers come in early …”
Well, that’s more than Dave did, isn’t it? Dave didn’t bother coming to work — preferring, instead, to “work” from his east coast manor.
Further: does anyone know what Steph does all day?
And Brian — who freely admitted that he has “no idea” when cashflow will go positive, and is biding his time until retirement…what does he actually do?
Not if they gave a real offer.
Optics matter.
Nothing screams “nothing’s changed” better than trying to cram an agreement down the throats of employees by doing an end run around union negotiators & poisoning the well with rank & file even if the revised terms aren’t half bad for a company in deep debt/distress like (Mc)Boeing currently is.
Oh, well. Looks like the ghost of the failed McDonnell Douglas remains alive & well despite Ortberg’s promises to the contrary.
What a shame.
+1
Nobody is ramming anything down their throat. If they don’t want it they are more than welcome to reject it.
If Boeing goes into bankruptcy everybody continues from wherever they find themselves
Circumventing the union, calling it a “final offer”, and attaching a short deadline — that certainly amounts to “ramming down the throat”.
As regards bankruptcy: the company is already dead — it just hasn’t been buried yet.
It’s a tactic but it’s not being rammed down your throat. Being rammed down your throat will be take it or I move jobs out of the state like 2012.
They don’t have to take it actually. In fact they’re not taking it.
Both sides are being greedy because some are even asking for 50% or return of a defined pension. So between IAM and Boeing they’ll kill themselves.
The backlog will have to be fulfilled somehow. Where is anybody placing 6000 planes. So Boeing in its current form might be dead. Will it be buried? Probably not. If the US government will bail them out but it just won’t retain its current form.
Boeing will continue exist in many ways as does MCD in some ways on the defense side
Let’s see:
– The Inflation Reduction Act allocated $400B — to stimulate an entire country.
– The Chips Act allocated $53B…to stimulate an entire sector.
…and you think that Uncle Sam will have any appetite to pump (at least) $60B into a single, hopelessly messed-up corporation?
Oh no, asking for 50%!!! But, in this whole negotiating thing, isn’t it a pretty common tactic to ask for more than you’re willing to settle for? Just like someone offers less than their willing to settle for?
Obviously, you have an obvious anti-union bias in your comments.
It did it for big 3 airlines. Multiple times actually.
The level of hopelessness is irrelevant. It’s the only of its kind in America, it’s. A major defense contractor and contributes over 150k jobs. It’s a lot less to do with the efficient or economies of saving it.
If so, nothing will ever be saved. If airbus was going through the same series of missteps the EU won’t let it drown either.
They also do not need 60 billion to save it. Mind you the us government was willing to give Boeing 17 billion USD in COVID RELIEF. And the books weren’t even as bad as they are now. Please thinking the US government won’t give that money is at best naive at worst stupid.
Boeing will not need 60bn please that’s dumb math. Just because that is their debt balance does not mean they need exactly that amount.
It’s far from dead. There are thousands of orders in the que.
Orders with zero margin, due to over-discounting.
Little point in having revenue if it doesn’t generate any earnings.
Oh snap bro!😎
,
Given the backlog on the 737 MAX and 787, combined with the current Airbus/Boeing duopoly, Boeing will continue building airplanes for as long as most of the current workforce plans to be employed there, even if it goes into bankruptcy.
The only incentive for the union to offer concessions would be to give Boeing cash to start a new airplane program. But over the past two decades Boeing has established that: (a) free cash goes back to shareholders whenever possible; and (b) new airplane programs are used as a stick to get further concessions from the union. So ultimately Boeing has just shot themselves in the foot here…why would the union offer anything?
So what if they bankruptcy I could absolutely care less and I work there Life Goes On
Guess next time you negotiate for insurance or anything for that matter, companies should just bypass you and go directly to your bank, I mean why not, nothing like having greedy corporate [Edited] take whatever they can to justify their bonuses..
Dink, there will be no vote because no offer was made to the Union negotiation team. Pull your head out of your [edited].
There was no official offer because your union said it could NOT rally everyone up for a vote by Friday. Regardless of rather the offer was made within good standing of the company and the union… bottom line. This isn’t going to end any time soon and hopefully everyone saved up for this. Today’s mortgages aren’t like they were in 2007 or 2008 They are WAY higher. One man being prepared for this doesn’t mean all of you are. I hope the best for them, but reality has to come to terms soon. 150 a week …. Avg $3000 mortgage around here based on current home prices..? Maybe not everyone is sitting at that point but 6.5 percent rates on top of that? Not too mention if you have some husband and wife teams there? Catastrophic if you ask me. No other employer around here can even get close to paying these mortgages. Hell these new Amazon facilities only pay around 20-25 per hr Everyone is counting on fairness and Boeing’s losses. Nobody seems to be talking about you alls.
Exactly, as a union member if Boeing doesn’t want to make things right and that causes bankruptcy or giving us 40% will cause bankruptcy I can go make money in a different trade. Plumbing and electrical will pay about 45% more than Boeing does once you get your journeyman’s. It will take less time to make that money too. If Boeing went bankrupt they’d get bailed out, Boeing is a national asset(countries largest exporter) in a market that’s a duopoly. Worst case scenario the company is nationalized.
you really dont have a clue! It WAS absolutely rammed down the throat, they just drew it up themselves and sent it to the workers, IT WAS NOT NEGOTIATED!
Well said, Howard Miller.
Thank you.
As angry the rank and file are, would it have mattered? Who cares about optics? This is about money, not trust and warm fuzzy feelings, that is what a contract is for.
If Boeing’s last offer was 38 percent with a $10K signing offer, Scott is writing a different op-ed this morning.
“Who cares about optics? This is about money, not trust”
What a perfect summary of Boeing’s business model 👍
And just look how well that model has served the company in the past few years 🙈
Agree with Bob 😉
That said myopia is abundant, across leadership ranks. We expect and hope for more heads to roll especially in BCA that is completely poisoned.
(Mc)Boeing is a great double entendre. Both a reference to the McDonnel Douglass/Boeing merger and a reference to turning a product to a commodity and the transition from a quality inspired operation to a profit inspired operation.
I don’t have a dog in this fight, but if I had presented an offer to the negotiating committee that they accepted but the membership voted 90+% to turn down and strike, I wouldn’t have a hell of a lot of faith that the negotiating committee knows what the membership wants. Do you present the offer directly or do you go through another “yes we like it — oh no we don’t.” I think a lot of this is pent up anger over the past and both sides are going to be hurt, maybe fatally.
Thank you for this comment. When you have no influence over your union, your negotiating input is absolutely useless to me. Might as well circumvent you and see how the deal lands.
The protocol is to to do everything through the union — regardless of what one may think of that union.
Then again, we already knew that BA has absolutely no respect for rules of any kind.
+1
+1
Opus, Your term “circumvent” re BA’s offer is exactly the “direct dealing” allegation the IAM is threatening to charge, yet again in the current contract negotiations.
You probably aren’t aware, but direct dealing is a violation of labor law.
The last thing Boeing might as well do, yet again, is approach the line of illegality as close as it can to achieve a financial objective.
As above, I have no skin in this game. But I have gone through difficult labor contract negotiations as union member. What often happns is the union negotiator will aim for the best contract possible under the current environment, then pass it on to the members for a vote, with a note saying this is the best available now. If the members want better, then reject it, and the union will take a strike vote, and if the strike vote is passed by a large margin, the negotiator can go back to the barging table with more leverage and try for more.
Lest we forget — while all the spotlights are currently on the strike, there’s plenty of other BA sh#t still going on in the background.
Lots of spectacular detail here:
“Latest round of Boeing hearings prompts call for decisive action”
https://www.columbian.com/news/2024/sep/24/latest-round-of-boeing-hearings-prompts-call-for-decisive-action/
Maybe will be better to bankrupt the Boeing, and start all over again?
Had the company offered 40% pay raise and went through prope channels this would have passed. Yes we want our pension back. The reality is corporate America hates employees and loves stock holders. Thanks Republicans.
stockholders are the owners left holding the bag after management and labor screw up. Who put the door in that fell out in flight and cost the company billions. It labor, some idiot on the line didn’t dp their job and now you want a reward for it too.much
It’s funny hearing comments like this. It’s apparent you have no idea what’s been going on at Boeing the last 10 years. Do you realize there was no paperwork recording the removal of the door? Why is that? You think any employee would put their job on The line. It’s obvious that management calls the shots and that there is no quality oversight. We are constantly under threat. How could anyone side with the Boeing Company? How about MCAS? How soon we forget. We were doing the functional tests on the MAX and didn’t know what it did. Definitely wasn’t a union employee that kept it a secret.. This behavior has been going on since the 787 came online..
I guess you never set foot on the floor. There are checks and balances. Ultimately management is responsible for it all. Their focus is schedule instead of doing the job properly, training the staff and putting quality and safety as a top priority. Layers of management completely ignored it for the sake of “shareholder value”.
Who ordered the plane be moved down the line?
“Hey, it was here yesterday” “Did anybody…” “Hey you’re needed at station 7”
The purchase of stock represents a belief that management and labor won’t screw up. Unfair that the managers (executives) are typically provided golden parachutes as the aircraft (company) spirals towards terrain.
The UAW didnt even get 40% and they ran a brilliant strike. you guys wont het 40% . You have to get what you can live with, without killing the goose.
Surely this isnt about just wages, and there is a number in wages and other things that will get a deal done.
But BA has to get to the table to get a deal done. Good luck, I’m rooting for the Union labor.
Every company wants to do more with less at the expense of the workers. They preach safety but always will forego safety for more production. When have you ever seen a CEO broke down and unable to pay his bills in retirement because of his labor to a company. NEVER! Employees need a decent pension plan for their senior years, after all they are the ones doing the labor. Labor and skills have to mean something in today’s environment or will history repeat itself to having 2 classes, the poor and the very rich.
I guess the honeymoon was over before it began.
As much as I understand Boeing’s precarious financial situation, bypassing the union with a non-negotiated offer does not look like a smart move to me.
It looks like business as usual under the old (inept) guard.
I had hoped for Boeing’s sake that Ortberg would alter the course, but this was not it…
@Brutus
Let’s not forget furloughing everyone else at 25% time off so that you can afford to break a strike.
It’s hard to believe the new CEO could already be hated worse than Calhoun.
just fyi…accept the new offer or write your personal check for October 24 healthcare!
Local IAM 751 is going rouge, 30% increase not good enough! IAM needs to let the past behind them…you have 401K with $10k company contribution
Now you know why Boeing did BAFO….If Boeing goes bankrupt, you can kiss Seattle commercial aircraft mfg. goodbye Hello South Carolina, no union, lower wages
Housing is more affordable in SC than WS
cheers Dave Pritchard
@Pritchard
There is one very powerful reason bankruptcy is not imminent. Where do you think the BOD and executives get most of their compensation?
The BOD doesn’t run the bankruptcy courts.
If Wall Street sends Ms. Pope packing, BA may well be in Chapter 11 within weeks.
IF Boeing cannot get cash (selling product, selling additional stock or getting additional loans from banks, etc), Boeing will NOT have any options.
Boeing either resolves this themselves OR a bankruptcy court will and they will look at saving the ENTITY, not any personnel or their pay/benefit packages (Execs or Union).
Yet, Everett is fixing all the airplanes that are messed up by BSC. Now tell me you need Everett 100+ years of experience more than we need BSC.
just fyi, there is not near the capable workforce there like there is here… not even close! And so many of the planes that were built in SC, came back here to Everett to be properly finished.
But SPEEA has a no furlough clause, so it will come down to layoffs No aircraft production, don’t need everyone standing around
I have heard that the one-day-in-four furloughs violate the SPEEA contract. Are they actually happening?
I’ve also heard that labor is only 5%-6% of the cost-to-build. Saving a percent to send the money to shareholders and piss off the workers seems foolish. Anyone know how much the 5-6% would go up if Boeing met the unions ask?
Look who hired Ortberg…and look who stayed on as “special adviser”.
I suspect that Ortberg was deliberately hired as a puppet / frontman / fall guy — a shiny veneer to give the illusion of change, while “business as usual” continues behind the scenes.
Bingo!
Time to declare bankruptcy and allow courts to reset all including union contracts.
Let the company fail.
Not sure the US govt want to risk a Lehman moment like that, the fallout would be enormous and hard to predict and contain. US taxpayers might need to step in.
Sure, for a short period, we owned GM, Stellantis……
The big problem would find a court that could handle Boeing and all its activities, set salaries and issue new stock making todays stock worthless and handle Boeings loans, the judge could ask Alan M. to return for 3 years like the British government did with Sir Stanley Hooker at RR.
It is going to be mighty exciting to see how this plays out now. What is Boeing going to do when their BOFA offer is rejected?
If they don’t budge they might have to file for chapter 11 or seek a bailout from the US govt. They might get the latter since they are certainly to big to fail but I do not think it will be a tasty solution for the current shareholders.
Much cheaper to just let the company go bankrupt, so as to erase all debt — at which point the components can be sold off for symbolic prices (e.g. 1$) to parties selected by Uncle Sam. For example:
– BDS can be flogged off to NG or Raytheon ;
– LM might be persuaded to take BCA — after all, Lockheed has a commercial aviation backround. The deal could be sweetened with the promise of some lucrative defense contracts.
– BCS is quite a healthy and lucrative operation, and could be sold to various suitable parties.
Problem solved for Uncle Sam, at very little cost.
Boeing seems to be playing quite an interesting game, here.
Something else is going on behind the surfaces, I think.
I agree that something else must be going on. Ortberg and others are smart people. They don’t do things arbitrarily. I think they are setting up for a bail out. Could be something else, but I don’t know what.
As far as shareholder value goes, a lot of Boeing shareholders have made a lot of money over the past 20 years. They have fully supported Boeing management over that time. After all, it’s the shareholder’s company, and if they’ve approved selling off Boeing’s assets to keep the stock price up but run Boeing into the ground, that’s their business. The shareholders are clearly not investing for the long term, otherwise they would not have supported these leaders for so long. This is how joint stock capitalism works.
We’ll see what happens. The 60B debt is a huge problem, especially since they are operating at a loss and pretty much all their programs are complete cl*sterf*cks except (maybe) the 787. On top of that they need ~30B to develop a new single aisle to stay relevant. The math just does not add up…
The company also has $60B in PDPs received, which are in the books as a liability.
These would have to be repaid to customers in the event of penalty-free cancellations.
For example: if TC throws in the towel and cancels old orders for 150 777Xs without penalty, BA will have to repay him 10% x 150 × $400M (×50%) …which is $3B.
So, technically, BA has $120B in total liabilities.
787 is a cluster also. I wonder how much money Boeing could have saved if the 787 was built in Everett instead of flying partially built 787’s up to Everett to be finished?
I can’t see LM being interested. It’d be quicker and cheaper for them to set up themselves than it’d be to buy BCA and fix it.
They won’t have to buy it: they’ll get it for free…with sweeteners thrown in.
Got a better candidate?
Would LM be allowed to transfer most/all future production lines from WA to TX and/or GA?
If yes they might be interested.
They’d have to be some pretty potent sweeteners!
As for candidates, I think a lot depends on the US gov. If they simply want to aim to retain expertise in the USA, letting Airbus win on condition of setting up more factories and design teams in Alabama could do it.
The USA could certainly fix Boeing or encourage LM, but if in the meantime Boeing produce nothing then the market will have already swung to Airbus. Airbus doesn’t have to do anything to become a global monopoly, they just need to wait until Boeing fails. There would be huge pressure from airlines on Airbus to take up as much of the slack as possible, including from US airline companies. If they plus the entire supply chain did that there is a risk to the USA that that might not happen in the USA. And then there’s no way back for the US.
If Boeing is going to fail, the US government needs a plan B ready to step in. Right now the only plan B that guarantees US involvement is to invite Airbus in. Any other likely should have been started years ago to be in place in time for the moment of crisis, which is pretty much where they are now.
@ Matthew
Why would Airbus want to sully its reputation by getting involved? Every product in BA’s portfolio is currently the subject of serious controversy — Airbus doesn’t need that.
On the other hand, an American corporation can be “persuaded” by Uncle Sam, using all sorts of arm-twisting. We’ve seen it before with takeovers of failing banks.
Also, look to Qualcomm’s rumored takeover plans for Intel. Although both semiconductor companies, they have very little else in common as regards product type, manufacturing strategy, reputation or finances. And, yet, there seems to be some sort of engagement. I sense that Uncle Sam may be working as matchmaker…
Thank you Team Airbus
@Harry
Bankruptcy in this case would due to the inability to finance accumulated debt that was incurred to cover previous design and quality issues. This is a hole that is functionally impossible to recover given the likely margins of product sales through the end of the decade. And it also leaves no room to invest in future product.
It defies logic to me how the stock price of Boeing is in the ~$150 range. It has been brought up to do an equity raise, but would you put your money into a company that has found a way to burn through billions with nothing to show for it?
Amen.
Completely agee with you, the math does not add up, see my previous comment above.
There is still the to-big-fail bailout possibility though…
Two words, Wall Street.
Wall Street: “Hi Steph, back again?”
Steph: “Yes. We want you to underwrite an additional equity float that will dilute shareholder equity by 23.6%, with a potential multi-billion-dollar burn for you if the share price tanks”
Wall Street: “Have a nice day”.
With all due respect Boeing has lost more money than if they would have just agreed to pay us what we deserve as its been 16 years since we could negotiate and no raise for 10 years is unheard-of.
Other companies in the south make more money than we do in Seattle.
I’m curious what companies in the south make more money? We have some of the highest paid jobs in the United States here in Washington. Mostly due to the tech sector, but Boeing is a leading employer to our area. Hell..our minimum wage in Seattle I believe is the highest in the nation. Majority of Boeing jobs are not college degree jobs. This is a union field. My union has been religious to $1-1.50 per year since I started 20 years. Ago. It’s not about deserve. It’s about you guys timing and the local labor force. Everyone is replaceable. And these days with open borders..for much less. Problem here is if you haven’t looked around or had the need to , competition , regardless of skill level isn’t based on what you know or how special you feel. Nor what Boeing COULD pay you all..it’s based on what they know they can get away with. Stockholder interest or even our local communities dont hold water up against Corporate bailouts and cheaper labor. the term skilled labor isn’t cheap and cheap labor isn’t skilled , are things any corporation can deal with when the timing isn’t right. And it isn’t right , right now! You guys need a short term satisfactory agreement til Boeing is sitting better. Just look at the numbers. Not the CEO ‘s wages and bonuses. That crap will never change. The rich won’t give up their money and the poor will never be brought up. Middle class will suffer the consequences for both.
If you feel you are not getting paid what you should be paid, please send your resume to other job opportunities outside of Boeing. No one is pointing a gun at you requiring you to stay at Boeing. Pass this on to the other members as they are part of the quality problems at Boeing.
https://leehamnews.com/2024/09/23/boeings-shareholders-which-do-you-prefer-dilution-or-bankruptcy/
“LNA welcomes the idea of a $30bn equity offering.
Boeing won’t fully recover without drastic action. And a massive equity offering best fits this need.”
You are welcome, Scott.
Not sure it is that easy to raise 30B at this point, which will mainly be used to pay bills and pay down debt. They actually need a lot more than 30B.
As you point out above — they need $90B.
As I posted elsewhere, a $30B equity raise will cause a 23.6% share dilution…good luck trying to find a bank willing to underwrite that!
A possible 30B share issue would most likely have to be done way below the 155 USD/share it is currently trading at. Dilution would hence be way bigger than that.
You right about $90 billion and new mfg location!
Median price of house Seattle…”As of August 2024, the median home price in Seattle, Washington is between $795,000 and $843,800″
Median price of house in South Carolina..”As of April 30, 2024, the median sale price of a home in South Carolina was $300,500, and the median list price was $351,897 as of May 31, 2024. ”
Do Boeing workers need $100k to $200k to make a living, probably! But Boeing just can’t afford the Seattle area anymore
Time to move mfg and engineering operation to SC and get a big state subsidy for doing it
It would be even cheaper to move operations to India — better qualified/motivated personnel, too.
Mexico is also a possibility.
Doesn’t fit in the current onshoring craze, of course — but, where that’s concerned, some people seemingly don’t realize that onshoring is (very) inflationary.
from AP article
“A 5% increase (from the previous offer)? It’s not enough. My mortgage is $4,000. I went to Safeway yesterday to get breakfast, and it cost me $62″ in groceries, Dias said.
Som Dom, an electrician with 17 years at Boeing’s factory in Renton, Washington, said workers need better wages for the high cost of living in the Seattle area.
“We just want a fair deal. We’re not greedy,” Dom said. “It’s tough to live in this state. You’ve got to make over $160,000, something like that, to buy a house.”
So can Boeing afford to stay in Seattle for the long term?
Labor is only 5% the cost of building a commercial airplane, so your estimated cost savings are way lower than you think for moving out of Puget Sound.
It does matter who you Elect from State down to City officials.
Wichita $230000.
@Harry
In reality Boeing probably needs to plan for 2 new aircraft to regain market competitiveness. You don’t cover 150 – 230 seats with one plane. Airbus does it with two. And both of those aircraft have further PIP possibilities. The Max has none.
You are right about that, they will have to choose which part of the market is most important to them.
I guess that Boeing doesn’t live by the buzzwords that they talk about everyday. One Boeing, Transparency, Trust etc…….
Boeing was very transparent on this latest offer, making it well-known what they offer at the same time as the negotiations team of IAM. It was IAM union leadership who thinks it was *too* transparent.
So the IAM have made their requests known. Boeing made the initial offer known. IAM membership then authorized a strike. Boeing has now made this recent offer which, by any account, swwetens it in key areas. Any new counter offer from IAM planned at this point? The membership didn’t care that the union leadership endorsed the previous offer. Why not let the membership decide this time by putting it up for a vote?
Why aren’t the union members equally blamed for quality issues, they are the ones actually building the planes.
The failing production system was designed, and is run, by management. Workers can’t fix it.
Was “just ship it” a shopfloor idea or a management idea?
Maybe it’s time for Boeing to start poaching engineers from Airbus. Just because you’re in a Union doesn’t mean you’re not disposable. Everyone is disposable. This will shake up the Boeing mentality.
Why would anyone at a successful company like Airbus want to work for an under-paying, abusive, dysfunctional, union-hating, essentially-insolvent wreck like Boeing…?
Boeing has gotten engineers from Europe many times thru history, Fokker, Saab, all UK Aircraft manufacturers. But Boeing is a different company now than 1970 and having +100 000 employees in Seattle that need $160 000 yearly income + benefits does not add up. The solution is new mainly robotic built aircrafts that can be “snapped together” where the customers are around the world. So Boeing is in a hole that is very expensive to crawl up from.
Agree on the automation, but that requires a new aircraft with design-for-manufacturing considered from day 1 and all through the development. A new program will cost ~30B and Boeing just don’t have that available currently.
I agree on a completely new aircraft designed for automation fabrication and assembly. However the cost for it is unknown and it can be lower or by international partners/governments that pay alot for a FAL in their country. Like Airbus Wing of tomorrow that is designed now for efficiency and automation. Most likely Boeing is doing the same. This solution will benefit Boeing as well in cost and volume.
Boeing needs to reduce its “Seattle labors” risks in the new commercial aircraft launch
They need to have multiple FALs around the world along with wing centers at each. Just have one FAL and one wing line at Everett for about 30% of capacity. Fuselage sections can be shipped to global FALs
“Assume a can opener..”
Pie-in-the sky delusion-all.
They don’t need to poach engineers, they need to poach managers.
Maybe managers with deep engineering knowledge and top executives to make sure customers; owners; employees and suppliers are happy and work together producing high tech quality aircrafts that are very profitable. (like Mercedes Benz in the 1900’s)
Wayne how would an EU national (French or German) obtain a green card, uproot their family and move to Seattle? For what pay?
And would they do it for a job that offers less than 5 weeks paid holiday a year? Good luck with that.
Or with a health insurance that has copays for everything? Good luck explaining to them and their spouse what exactly this think is.
Come to think of it it would be much much cheaper in the long run for Boeing to set up shop in an EU country.
There are different roles, Design could be next door to Pilatus in Stans Switzerland, sales/finance in London, Automated-robotic parts Manufacturing in Stuttgart, Final assembly to stuffed modules in Sevilla and shipped/flown to FAL lines in India, China, Filipins or Indonesia, Mexico, Paraguay, Lithuania, Florida, Bangkok, Qatar.
One thing to keep in mind is that professional salaries in Europe are significantly lower than equivalent in USA. 20-30% lower. But social benefits are greater, so that makes up some of it. So a European aerospace engineer moving to a Boeing job would get a significant raise, but social benefit costs would be greater. Whether it works for an individual is case by case.
Boeing has set up engineering offices in non-american countries. One famous one was in Moscow, but that’s shut down now. There is lots of off shore talent available, but it’s tricky to get it work when you are developing large products. 787 development is a good example of soem of the challenges.
I don’t ever see any US cities in the top ten most livable cities in the world — whereas the list is full of cities in Europe, Australasia and Canada.
Same story as regards the world’s most livable countries — the US only comes in in postion # 21.
When considering gross salary, net salary, paid vacation, parental leave, healthcare, education, housing, public transport and general infrastructure, there’s very little to tempt a European to move to the US for work — particularly Europeans with kids.
As regards wealth, several countries in Europe top the world list of median wealth per capita — with Switzerland in the very top position. After Switzerland comes Luxembourg, while the US is in fourth position.
Time to re-examine some jaded clichés.
Yes, the US has some small problems to solve to attract skilled aerospace engineers from the EU. Drugs, Weapons, Bad areas, High costs in attractive areas, Poor vacation and Childcare, Violence, Homeless people, Food that don’t meet EU standards. Still there are areas in the US that have little of above issues with great schools, healthcare, great housing areas and cheaper toys for men like powerboats, cars, aircrafts, motorcycles and sporting opportunities in a mild climate with easy access to big events. But it takes high taxes for decades to fix these problems and no top politician is elected on raising taxes (except maybe Minnesota…)
I some with several German technicians just a few weeks ago and they are very unhappy with the cost living in Germany. Much higher than here and the country has really gone downhill in nearly every aspect in the last twenty years. Either there or here, the story is the same. The excessive expanding growth of government in every aspect of our lives has made virtually every one of those factors worse and far more expensive and unsafe.
This is a … disappointment. I initially thought Ortberg had gained the trust of the union at least, and that this would be part of a turn around, and oh I don’t know but perhaps a return of the good old days of Boeing being a company to admire was on the cards.
Seems not.
Surely they are now completely stuffed. Anyone told Airbus they’re a global monopoly yet?
I think many were kidding themselves that IAM was not gonna strike. They were going to do what they prepared to do. They want their 40% or damn the entire workforce in the area.
Actually it’s the arrogance of the leadership that caused the killing of hundreds of people and the destruction of our quality safeguards. Costing the company billions and loss of their argument our product costs more because of higher quality. Now while those same people who receive over 75.4 million dollars a year, want to tell us they cannot afford a better contract. Fact is we are unable to attract quality skilled people because we are paying below the competitive market.
Update: Boeing has just updated its “Best And Final Offer”
The sad clown show continues.
https://www.reuters.com/business/aerospace-defense/boeing-offers-additional-time-striking-union-workers-vote-new-offer-2024-09-24/
This article is incorrect.
The offer WAS PRESENTED to the IAM 751 negotiating committee before it was released publicly. The union has confirmed this fact in its statements.
While IAM 751 may want the opportunity to negotiate further, they were not circumvented in the process.
@Sxf24 Only by minutes.
Your statement is untrue
The Union forgets a few things.
1) They caused the 737 door blowout when inexperienced hourly employees reassembled the airplane incorrectly after ignoring the removal process.
2) They are the cause of out of position work by not completimg the jobs on the bar charts Sequentially OR failing to have the Industrial Engineers apply correct time estimates
3) Hourly assemblers are responsible for the vast bulk of the FAA procedure findings due to their inabiliy to follow the written processes and planning paper despite signing an ethics recommitment annually pledging to do so.
LASTLY they should realize that their shortcutting of processes got the company hauled back into court to invalidate the deferred prosecution agreement and set off the current draconial oversight levels by the FAA and the limits on deliverys as well as the hold on construction of 737 line 4 in Everett.
Gosh, you seem to think that union workers comprise an omnipotent body that just does what it wants, without any accountability.
No possibility that shopfloor workers do exactly what they’re told to by clueless/disinterested management?
Was it the union that hung up that “just ship it” banner?
Got any links to back up your assertions?
I very much doubt it.
Abalone. Since even you have a hard time with the gacts lets start here……
https://abcnews.go.com/US/documents-detail-chaotic-moments-alaska-airlines-door-plug-blowout/story?id=112623209
The ntsb report quotes from this article as follows
Boeing records reviewed by the NTSB showed that damaged rivets on the edge frame forward of the plug were replaced by Spirit AeroSystems employees at Boeing’s factory in Renton, Washington, on Sept. 19, 2023, according to the agency’s report.
Boeing had to open the plug by removing the two vertical movement arrestor bolts and two upper guide track bolts for the rivets to be replaced, but photo documentation obtained from Boeing showed evidence that the plug was closed with no bolts in three visible locations, according to the NTSB report.
One bolt area is obscured by insulation in the photo, though the NTSB said it was able to determine in its laboratory that that bolt was also not put back on. During the hearing Tuesday, Lund said that paperwork authorizing the removal of the door plug, which would have documented the work being done, has not been found.
So the NTSB pointed at the employees errors as well as Elizebeth Lund not providing the removal paperwork, because it does t exist…… Just as I said…. Not Allegations but instead facts…..
Gosh, you’re reading an awful lot more into that report than is actually there.
Does the report say that the employees weren’t following procedure?
There was a (now famous) comment here on LNA just days after the Alaska event. It came from a Boeing employee, and went into fine detail on the horrendous shortcomings of the administrative system used to record modifications on frames. That comment went on to be referred to by various (international) news outlets.
You think the failings of that system are the fault of shopfloor rather than management?
Lund “can’t find” documentation in her own company — and that’s somehow the fault of the shopfloor?
Related: BA similarly has no (proper) manufacturing log of the 787 fleet — so it doesn’t know which frames are affected by the various gremlins that have come to light in the past few years. Imagine that: no manufacturing log! Is that also a shopfloor fault?
Abalone
As ome who has initiated more removal RISR”s than I care to remenber, That thing Lund convienently cant find because they didnt initiate one, It is the responsibility of any mechanic doing a removal to have a Liaison Planner initiate a Removal Instructiom Ships Record. Lund cant find it because the mexhanic disnt reqjest that it. E unitiated. So yes its the .exhanics fault. I have years of first hand experience with the manufacturing process and the systems that produce the shop instructions. I dare say that I am far better positioned than you to are to sort the fly shit from the pepprr on this one. What in your background has placed your hands on Boeing aircraft in their factories during the manufacturing process where your directions were driving the process.
.. I suspect its a hole in yoir resume.
With respect to the 787 program its built in Catia Eno ia and I refused to work on Tupperware, so I wo t co.me t on it
Abalone…….
Continuing with facts
https://www.boeing.com/sustainability/ethics-and-compliance#anchor1
On this page you will find thw annual ethics recommitment process. The slecifics I pointed oit are found bere…….
Every year, Boeing employees reaffirm their commitment to do their work in a compliant and ethical manner, and respect one another, by reading and signing the Boeing Code of Conduct(opens in a new tab). Because our Code of Conduct guides the way we do our work every day, we provide the code in 18 languages to reach employees in their native language.
Re: “Compliant”
I’ve seen no evidence that shop floor work isn’t “compliant” with the procedures set up by management.
I’ve seen plenty of evidence that those management procedures are certainly NOT “compliant” with a whole spectrum of basic rules and FAA regulations.
“Just ship it” comes to mind.
Who vetted and approved MCAS? Shopfloor?
Who vetted and approved a crap design for the 777X thrust links? Shopfloor?
The list goes on and on.
You can’t expect the footsoldiers to work miracles if their officers and armaments are crap.
Abalone.
Stay on point please.
I said the mechanics did the plug door reinstallation incorrectly.The ntsb report said so. I said they didnt initiate a removal process form as required.they didnt create one as Liz Lund indicated thru her inability to produce it. I said the door incident was the initiating event in the reopenimg of the DPA agreement as reported by multiple news sources. I said every employee signs a commitment to do his job in a correct and ethical way annually and the machinists didnt.
I DID NOT SPEAK about thrust links, mcas, tbe 787 or any other things you are now throwing up to deflect the discussion. I produced sourcess behind my statements as you asked and also told you I was there for years. NOW stay on point if you wish to continue……
@PNW
I’ll bring up whatever subject matter I want, thank you.
You made broad, sweeping statements about the union contributing to BA’s mess…and there’s no obligation to counter that solely on the basis of subject matter that lies within your comfort zone.
If you wish to use the union as a scapegoat, then off you go 👍
Most other commentators out here in the real world pin BA’s woes firmly on management.
In all the testimony and investigation done so far for the door plug blow out there is no evidence that any individual did anything wrong. There is lots of evidence that the system to track work and the management of that system had many shortcomings which contributed to the failure. This is not a people issue at all. It is a systems issue. Systems are designed, configured and maintained by managers, not workers.
No one was happier than me to see King Calhoun ousted in the recent coup d’etat by the airline customers, yet now I can’t help wishing that this strike had occurred during the reign of King Calhoun, so he instead of Ortberg would be forced to field angry calls from the airlines venting about yet another delay in their deliveries.
Yes, that would have been good EXCEPT that the ‘King’ might have made another bad judgement error in settling the strike. I’m hoping that Ortberg continues to be smart analyzing this situation and doing what is best for Boeing (not for mgmt, not for union).
“… Ortberg…doing what is best for Boeing”
You mean like burning $100M per day, playing Russian Roulette with his shopfloor…while further worsening the delivery delays at exasperated airlines?
That’s “best for Boeing”?
It’s funny how no one in the media is talking about how Ortberg’s last job was being in charge of the MCAS program! It’s also funny how he is now the Boeing CEO. Failed ceo in Calhoun replaced by another failed ceo in ortberg. What a win win for this company. Going to go bankrupt by all these idiots in charge.
I for one am confident that Boeing will pull out of its financial nosedive very soon without recourse to extreme measures such as dilution or bankruptcy. How do I know this? Because it was only six months ago, I believe, that ex-CEO Calhoun told investors on his earnings call that sometime in 2025 the cash flow spigot would once again be open and gushing forth $10b in free cash flow.
Surely Mr. Calhoun would not promise something impossible to deliver?
That would be dishonest!
😉
At least CFO West is still there to do the dissembling re FCF.
“not sure / hard to say”.
787 is a cluster also. I wonder how much money Boeing could have saved if the 787 was built in Everett instead of flying partially built 787’s up to Everett to be finished?
[Comment removed as violation of Reader Comment rules.]
Jeff: we are hiring at Microsoft and other high tech. I’m sure you want to get your 40% raise. For that amount money you are asking, do you have your master degree in engineering? Lol.. and you cannot eat chips, soda and do 1 job a day worth 30 min of work. And no Netflix and watching YouTube all day long.
Scott….is this language appropriate for this discussion board?
Nope. Thanks for bringing it to my attention.
Lazy Bee…
Boeing please move to SC or Kansas. I hope this happen
Nothing has changed, and nothing ever will change — this company deserves to have its production licenses revoked by the FAA:
“Boeing Workers Felt Schedule Pressure Even After Midair Blowout”
“(Bloomberg) — An internal Boeing Co. survey found many factory workers still felt pressure to prioritize speed over quality months after a midair blowout on one of the company’s jets sparked a crisis of confidence in the planemaker.
“According to the survey conducted with about 2,100 Boeing workers in May — four months after a fuselage panel blew off a 737 Max aircraft shortly after takeoff — less than half of frontline manufacturing personnel stated that schedule pressures didn’t cause their team to lower standards. The revelation shows that workers continued to feel pressure to cut corners even after Boeing’s campaign to overhaul its safety culture was well underway. ”
“The May survey results were released by Democratic staff on the Senate’s Permanent Subcommittee on Investigations in a memo ahead of a Wednesday hearing with FAA administrator Michael Whitaker on the agency’s oversight of Boeing. The memo also contained other findings the staff said it’s made as part of its ongoing probe into the planemaker’s safety practices.
“The newly released information raises questions about the effectiveness of the FAA’s oversight of the company,” according to the memo.”
https://www.bloomberg.com/news/articles/2024-09-25/boeing-workers-felt-schedule-pressure-even-after-midair-blowout/
The midnight Friday deadline for the vote was postponed with the new deadline not announced yet.
So, maybe Ortberg will find a way to stabilize the situation & prevent further adversarial posturing by both sides.
Discrete, back-channel dialogue by trusted intermediaries to restart negotiations might be a good start for both Ortberg & union leaders as optics (aka PR) matter in situations like these – and all the more so at companies/industries that attract as much media attention as Boeing/aerospace does.
Boeing workers are complaining to FAA they are pressured because they dont want to work. Just sit and watch Netflix all day. And when they are asked to work or do their job, they tell public they are being pressured.
Really? Come on… that’s just low.
Boeing will sell equity shares (dilution) to raise capital….leading to stock delving into the ‘junk’ realm for investment rating.
This strike will end, which tee’s up the coming SPEAA contract (settled w/o strike). Ortberg needs to quickly move the leadership chess pieces…competent in, incompetent out.
Focus on quality 1st, and the safety/production rate increases will follow. Establish & enable a solid quality-savvy leadership team to set the tone for production, not the other way around…a lot of work to be done on this front.
Boeing will find its way back…I’m certain of it.
If they do a share issue they might be able to keep their investment grade rating for their bonds, if they don’t they risk losing it it and be degraded to junk status.
Possibly, you may be correct.
There most likely is a need for $15-20b to start righting the ship (as long as they do it correctly this time). Either issuing shares or adding more debt…gotta raise capital. I think Junk rating is coming regardless of which way they go.
Not sure that an equity offering will trigger a downgrade in rating – remember, Moody, S&P and Fitch are rating the ability of the corporation to pay it’s obligations, namely the bonds.
An equity offering is just diluting the value of the company amongst more investors.
If anything, if BA declares that an equity raise will put funds against debt, the risk of default is less.
Related:
You (and LNA) were under the impression that BA could just sell the shares from previous buybacks — assuming that those shares weren’t cancelled long ago. That would raise money at today’s share price, without dilution. Why is there no further talk of this? Are we to assume that the shares in question are no longer on the balance sheet (i.e. were indeed cancelled)?
‘Are we to assume that the shares in question are no longer on the balance sheet (i.e. were indeed cancelled)?’
Check the BS
https://s2.q4cdn.com/661678649/files/doc_financials/2024/q2/2024-06-Jun-30-8K-PR-Ex-99-1.pdf
Common stock, par value $5.00 – 1,200,000,000 shares authorized;
1,012,261,159 shares issued
2018 – last year of big buybacks
https://s2.q4cdn.com/661678649/files/doc_financials/annual/2019/Boeing-2018AR-Final.pdf
Common stock, par value $5.00 – 1,200,000,000 shares authorized;
1,012,261,159 shares issued
—————————————–
All 1.2bn shares still there.
But if BA needed to, they could just authorize more shares. Simple as that.
Correction…SPEEA 🙂
To my mind Boeing’s behavior over quite a period of time now
has not been that of a VLC intending to remain in business; at least,
not in anything like its present form.
#theatrefromBoeing
Adding: notice that Mister Calhoun is still on the BoD, and a ‘Special Adviser’; also, his apparent protege Ms. Pope- she of
the absurdly thin resume- is somehow head of BCA..
Mm.
@Vincent: Calhoun’s status was the original plan, but he resigned from the Board on Aug. 8. I doubt he’s doing much advising.
https://www.boeing.com/company/general-info/corporate-governance#board
Thanks for the newer information.
The last story. I saw on Calhoun reported that he agreed to a face to face meeting with one of the many whistleblowers. This was surprising because he agreed to do this AFTER he was out as CEO.
The month of September is nearly done? Has this meeting occurred???
from Reuters article
“”The survey results from yesterday were overwhelmingly clear, almost as loud as the first offer: members are not interested in the company’s latest offer,” International Association of Machinists and Aerospace Workers District 751 said on Tuesday.”
So write your personal check for October 2024 healthcare…and have IAM District 751 make a counter offering or you will be writing more personal checks for November and December healthcare!
Boeing has been paying crap money for for more than a decade,which means that anyone who arrived in that period was earning even less money before,and therefore is achieving the going rate for their abilities.The implication must be that that’s all they are worth.Is the west coast just too expensive a place to do business in for an engineering company?
The more I look at this, the more I am thinking that Boeing may have a point.Although I would have a lot more sympathy if they had invested a lot more in the talent pool anywhere.
If Boeing insists on bypassing the union and this latest offer should pass,which I don’t see, I’m curious how the union could keep charging 93.00 a month in dues, and with raises it will definitely go up, then the 33,000 workers should also demand a 40% decrease in dues….
“Spirit to begin furloughs in 3 weeks if strike at Boeing continues, FT reports”
https://finance.yahoo.com/news/spirit-begin-furloughs-3-weeks-222954880.html/
Does anyone still think that BA’s planned merger with Spirit will ever actually materialize?
Bypassing of unions and putting an ultimatum to the union base directly has the fingerprints of Peter Johnson, same tactics employed during a previous Boeing union labor agreement negotiation back in Australia. Even before entering management he was never shy to overtly express his desire “to crush the union”.
Thanks for this comment, DB.
“Boeing and machinists’ union to start ‘mediated negotiations’ to end strike ”
“On September 25, 2024, the IAM District 751 issued a statement saying that the Union Negotiating Committee and Boeing will meet with the Federal Mediation and Conciliation Services (FMCS) on September 27, 2024, “to continue mediated negotiations”. ”
“The union stated that after a “decade of hard work and sacrifice to keep Boeing flying high”, the company’s leadership rewarded themselves with record bonuses, while the workers who built the aircraft and carried the company through its darkest times, “struggled to make ends meet”. The union added that it is “time for Boeing to make things right for its workforce”. ”
https://www.aerotime.aero/articles/boeing-and-machinists-union-to-start-mediated-negotiations
One wonders why BA has suddenly changed its stance — just a few days ago, the company refused further negotiations.
Was Steph sent packing by Wall Street?
How’s ol’ Steph doing, anyway? Haven’t heard much from BCA’s
CEO since- well, since ever. Curious.
#opaque
“Boeing Strike Leaves Asian Airlines Sweating on Plane Deliveries”
“Responding to queries from Bloomberg News, Korean Air Lines Co., Vietjet Aviation JSC and Japan Airlines Co. said they were either suffering delivery delays due to the strike, expecting planes to arrive late or concerned about handover dates slipping. Others including Singapore Airlines Ltd. said they were working with Boeing on delivery schedules in light of the factory shutdown.”
https://www.bloomberg.com/news/articles/2024-09-25/boeing-strike-leaves-asian-airlines-sweating-on-plane-deliveries/
Imagine the compensation amount that BA is having to pay airlines for the incurred delays — money which could have been given to its own employees, instead.
Strike is now going on 2 weeks — that’s $1.4B flushed down the toilet. Once again, that’s money that could instead have been spent on wage hikes.
Looks like the Board isn’t very good at logic.
Then again, anything is possible when the left hand doesn’t know what the right hand is doing…
As you stated, it doesn’t matter anyway, Boeing doesn’t have the money or a plan forward. The union workers in the comment section can get their resumes ready and we can close this comment section now.
Of course Boeing has the money — it just continually squanders it on the wrong things.
For example: in the current case, it would have cost a lot less to just give the union what is was asking for — if BA had done that, it would now be generating revenue rather than burning cash.
And why close the comments section?
I think it’s excellent that LNA is giving BA workers a chance to express themselves — makes a very refreshing change ftom the meaningless PR waffle coming from BA’s official channels.
Considering the amounts of strikes at Boeing Seattle historically most likely is strikes mentioned in all purchase contracts as an excusable delay for late deliveries from Boeing not causing any penalties and the price index for final payments untouched to actual delivery date.
‘Can the Machinists Save Boeing from Its Management?’:
https://www.labornotes.org/2024/09/can-machinists-save-boeing-its-management
Very interesting article 👍
Thanks for posting it.
Of course, it won’t chime well with those trying to pin BA’s screw-ups on the shopfloor rather than the C-suite 🤭
I hear ya.
Abalone.
Stay on point please.
I said the mechanics did the plug door reinstallation incorrectly. I said they didnt initiate a removal process form, they didnt create one as Liz Lund indicated thru her inability to produce it. I said the door incident was the initiating evennt in the teopenimg of the DPA agreement as reported by multiple news sources. I said every employee signs a commitment to do his job in a correct and ethical way annually and the machinists didnt.
I DID NOT SPEAK about thrust links, mcas, tbe 787 or any other things you are now throwing up to deflect the discussion. I produced sourcess behind my statements and also told you I was there for years. NOW stay on point if you wish to continue……
PNWgeek:
I would like this to be a discussion in regards to the Door Plug, all too few of those.
So, in that light, If I have things wrong, just say so. I have read the various reports and should do so again. Like MCAS, its not a slam dunk as regards to the chain of actions and lack of them. Its confounding.
I think its full agreement that the trigger was bad rivet work around the Door Plug from Spirit.
That in turn lead to a series of actions that claimed the rivets were corrected and were not.
At which point the gap in process seems to have occurred. Opening the Door Plug was not listed as same as removing it. That is a Boeing process failure. Obviously if ;you open it, you have removed bolts and thee should be a post documentation that said bolts were both installed and inspected. That looks to be a Boeing failure.
But a lot of stuff was being handled by a Chat system and not the documentation system. Again that to me is a management failure. I don’t see the chat system was any part of an approved process. Workers don’t live at that level. Its a manager system.
The other appalling gap is someone closed the door plug. That is murky to me. It clearly was not documented and it clearly required bolts to be installed and inspected.
But if there was no original documentation because it was not a documented action its the Catch 22. If it did not happen then it does not exist. Again clearly there is zero difference in a door plug being opened and one being removed.
I don’t see workers being blamed. You can’t to a job unless its assigned.
Involved in this is also the rush process that moves aircraft regardless of status. Did a manager close that Door Plug? Was he yelling at someone to close it?
I have been on that pointy end of being yelled at by a manager. In that case I did cave and did something I should not have. Damage was done. When it was written up, I was chastised but not strongly. The yelling manager was held to be accountable. One aspect I was told was that manager did not have the authority to tell me what to do. Really? Every other time that manager or one of the other managers in his group made a noise, we were told to jump.
It was then made clear, no, they cannot tell you what to do. If that happens and its an areas we have clear policy on, refer it to us. If you are not sure, refer it to us. If they just want the lights on, yea, do it.
I want to add, often we had safety rules that meant a huge impact on a miner item. Being on the mine face, we often made decisions that as long as no one was there to report it, we did it. If it was truly dangerous, then we did the full drill.
But on a shop floor process has to rule and the process is all in the management hands.
We had one case where a company manager violated process repeatedly and the monitor company manager ignored it. But workers were told to follow it (and it was absolutely valid to ensure a disaster did not take place. Hard to function where that happens. I did anyway but others looked at it and cut the corners.
Can you blame them?
From the Labor Notes article:
“..While Boeing wailed that the strike may cause mortal wounds to the company, the Machinists union has for decades been fighting against the company’s self-wounding practices: rampant outsourcing, undermining of quality inspections, moving work to non-union shops, and hollowing out what used to be a coveted family-sustaining job.
Company policies have resulted in the loss of experienced workers, production delays, mismatched and shoddy parts, and the disastrous quality lapses that led to an Alaska Airlines door plug blowout in January..”
and
“..The Federal Aviation Administration (FAA) requires in-person inspections by qualified workers, but in 2017 Boeing tried to speed up production by having mechanics sign off on their own work.
At the company’s assembly plant in North Charleston, South Carolina, which currently has no union, the lack of worker power and input meant the company tested out cuts to quality inspections there first, around 2017, then expanded into the Puget Sound plants, where union members rallied to stop the cuts, flooding meetings and making the question a shop floor issue..”
It’s the IAM that is in fact trying to save Boeing, rather than that outfit’s insular, self-interested management.
Oh dear…not good news for BA 🙈
“Southwest Airlines To Sell Planes As Growth Plans Falter In Strategic Move To Slash Costs”
https://viewfromthewing.com/southwest-airlines-to-sell-planes-as-growth-plans-falter-in-strategic-move-to-slash-costs/
—
Oh dear # 2:
“Brazilian Airline May Be 1st Outside Of Asia To Buy China’s COMAC C919 Planes”
“The carrier told Reuters that it was forced to look for alternatives since Airbus and Boeing have sold out their A320neo and 737 MAX delivery slots until the next decade, while Embraer did not offer a large enough aircraft type for the airline.”
https://simpleflying.com/brazilian-airline-may-be-1st-outside-asia-buy-comac-c919-planes/
Southwest’s recent move sounds more tactical [ahem] than strategic, but yeah.
Interesting about the Brazilian carrier and COMAC. 😉
They’ll do well in the global South, I think. At minimum.
If Southwest does not place an order for thirty 320s to send Boeing a wakeup call then I will agree with the raider that their BOD needs to be replaced as a whole.
Yeah and Easyjet needs to immediately order 30 737s.
See how logical that is
“Boeing Needs to Take Cue From UPS and Pay Strikers”
“Boeing Co.’s labor negotiators should have paid more attention to how Carol Tomé, the chief executive officer of United Parcel Service Inc., handled talks with its union last year. UPS workers were itching to strike, and the company was inevitably going to have to give hefty raises.
“Instead of digging in over a couple of percentage points on the salary increases, risking a strike and creating more animosity with its workforce, Tomé relented to the union’s demands”
https://news.bloomberglaw.com/daily-labor-report/boeing-needs-to-take-cue-from-ups-and-pay-strikers-thomas-black
Mebbe Boeing plans to build the one dude here’s “snap-together” airplane made w/ CF, robotz, and hopium.
That should work.
There is a decent chance that Boeing et al do not have the same primary goals as UPS’s management did in their negotiations.
Just a thought.
Ahem
“NTSB issues urgent safety recommendations on Boeing 737 rudder system. Rudder control system could jam or become restricted on some 737NG and 737MAX airplanes:
https://ntsb.gov/news/press-releases/Pages/NR20240926.aspx
https://x.com/NTSB_Newsroom/status/1839415861767213179
Yeah. I think there have already been some recent rudder-command issues on those models, though thankfully no crashes.
The recent 737 rudder issues are sounding a little like the old
ones- reponsible for two all-fatalities 737 crashes in the 90s, and very nearly a third one:
https://en.wikipedia.org/wiki/Boeing_737_rudder_issues
“We’re still seeking more information on this, but United tells @theaircurrent
that the 9 affected 737 Max airplanes had their suspect components removed “earlier this year.” Those 9 components were on airplanes that were taken as white tails previously built for other operators.
https://x.com/jonostrower/status/1839430684387209527
Mar 7, 2024
“This incident flew under the radar. A United 737-8 suffered from a “stuck” rudder incident landing at Newark, which was replicated in a flight test. NTSB says a disabled (by United’s specs) “rollout guidance servo” restricted movement of the rudder when cold soaked for an hour.
“…the torque to move the servo’s output crank arm was significantly beyond the specified design limits. Because the servo output crank arm is mechanically connected to the rudder input torque tube, the restricted movement of the servo’s output crank arm would prevent the rudder pedals from moving…”
https://x.com/AirlineFlyer/status/1765778679785750956
@ Pedro
““…the torque to move the servo’s output crank arm was significantly beyond the specified design limits.”
Definitely the union’s fault! 🤭
“Most scrutinized plane in history”
“The surprisingly low pay for those relatively new to Boeing’s blue-collar workforce highlights both the financial strain they face during the strike — and the reason for striking”
“The young woman pictured is earning more on strike from a gig at Target than she was earning at Boeing
https://x.com/dominicgates/status/1839326275095449636
The Seattle Times
https://t.co/J00Y26sXRd
The wage at Target is essentially the maximum.
Boeing workers as they increase their skills and get trained up get get much more in a few years . A few years at Target , maybe 30c per hr more ?
However the Boeing offer for 1st year employees is much more generous than Target but they rejected it- the pay was OK but the benefits werent
Wonder how much the starting pay is for the United Work Front semi volunteers. Give us a number ?
@Dukeofurl
Well when you can’t dispute facts, you come up with insinuation in the comments section.
How difficult is it for BA to treat their workers fairly, without abuse?
How do you know “the wage at Target” is “essentially the maximum”?? You have indepth knowledge of Target’s pay scale at each state/city of each position?
CNN: Boeing workers pressured to put speed over quality, FAA says
After working three years with BA, this worker still earns less than one working at Target. Is it reasonable? Is it fair wage??
“Javier Guzman, 21, started working at Boeing right after high school. After three years with the company, he now earns $21 an hour as an aircraft sealer on Boeing 737s.”
Starting wage at Target has been $24 per hour since 2022, for employees working 40 hours per week.
The cited Boeing employee is getting $21 per hour after 3 years.
Take your pick.
https://leehamnews.com/wp-content/uploads/2024/09/Boeing-Contract-Comparison_Fact_Sheet-9-11-24.pdf
new offer is $63,800 pa for those currently on $20ph
Boeing has benefits !
Medical Cost Share16% (Boeing pays 84%) – current
And yes the current base is too low thats because it was negotiated in 2008 !
With extensions since but not a full negotiation like this year
The current contract was hammered out in 2008 after a 58-day strike. It was meant to be a four-year agreement, but since then, two multi-year contract extensions were bargained secretly between top IAM leaders and the company, without the usual union member surveys and participation. Both extensions came as Boeing engaged in a kind of hardball jobs blackmail against the union.
In 2011, after Boeing threatened to build its 737 MAX in other states, Machinists union members voted to extend their agreement by four years, thereby guaranteeing no strikes through 2016.
https://labornotes.org/2024/03/finally-back-bargaining-year-can-machinists-save-boeing-itself
A dollar in 2008 is worth $1.4621 today. Lol.
Anything less than a 46.21% raise means a lower standard of living!
From the “United Work Front semi volunteer”, Dominic Gates:
“Union after mediation with Boeing today:
Boeing was “adamant that it will not unfreeze the defined benefit plan …would not engage substantively about other issues …higher pay, quicker wage progression…
“Talks broke off, and we have no further dates scheduled at this time”
https://x.com/dominicgates/status/1839856429827797292
Not surprised: Lufthansa now expects its 779s to be delivered from the end of 2026
‘… according to the newspaper Handelsblatt : “Officially, the planes are supposed to arrive at the end of 2025. Internally, no one believes that will happen anymore – not at Lufthansa, and probably not at Boeing either.”‘
https://www.aerotelegraph.com/lufthansa-plant-mit-boeing-777x-erst-ab-ende-2026-und-erwaegt-airbus-a350-in-frankfurt
In view of the ongoing thrust link debacle, it’s very doubtful that the 777X will be getting certified any time soon.
Lufthansa’s 2026 date sounds more like a fantasy than a prognosis.
@Abalone
If the thrust link is the only things that goes wrong, then this is not likely a meaningful delay greater than 6 – 12 months.
Biggest problem is that there is no flying going on and hence no learning about any further snorkeling issues.
Q1 2026 EIS is plausible, but it depends on a lot of things going right for Boeing.
If a major redesign of the thrust link is required, it will cause a delay of years.
At present, it isn’t even known what the cause of the problem is…will probably take months before there’s enough clarity on that alone.
Fort Berg hasn’t showed us that he’s any different than anybody else. He’s not leading the negotiations, which he should be if he’s concerned about labor. He’s not showing us any leadership. Just business as usual,
Not surprised at all.
Various commenters here had great praise for his PR stunts when he started — featuring floor walks, handshakes and supplier visits. However, no press contact was allowed during those events — something that should have woken people up to what was really going on. We still haven’t had any form of press conference from him.
Of course he’s not involved in the talks — that would be far too substantive. Much easier to stay in his tower and flush $100M per day down the toilet — with help, of course, from the other Board members, who have an excellent track record in wasting money.
Day 15 – Strike Update September 27, 2024
Even the pups are Holding the Line!
Today, your Union Bargaining Committee went back to mediated talks with Boeing. With the support of Federal Mediation and Conciliation Services (FMCS), we had frank discussions about the needs of our members and the expected outcomes they are striving for.
We used the recent survey to support our positions and again stressed the need for the reinstatement of the defined benefit pension. While conversations were direct, we did not make progress on the pension issue. The company remains adamant that it will not unfreeze the defined benefit plan. The company also would not engage substantively about other issues that the membership has made clear remain top priorities, like higher pay, quicker wage progression, and more PTO. Talks broke off, and we have no further dates scheduled at this time. We remain open to talks with the company, either direct or mediated. We will continue to fight for the issues that are important to you.
Stand strong, Brothers and Sisters. We will keep you informed of any further talks that are scheduled.
In Unity, Your Union Negotiating Committee
Boeing’s (hilarious) response:
“Boeing remains committed to resetting its relationship with its represented employees and wants to “reach an agreement as soon as possible,” a spokesperson for the company said in an email. “We are prepared to meet at any time.””
https://finance.yahoo.com/news/boeing-wage-talks-break-off-042418456.html/
Small word of caution as regards the pension issue:
For years, The Netherlands has been regarded as having the world’s best pension system. However, even it is turning away from defined-benefit schemes and, instead, introducing defined contribution schemes — somewhat akin to the 401(k) concept. This is not being done to save money — it’s being done so as to give employees greater flexibility to switch jobs and “bring their pension with them”.
Just food for thought.
https://www.nautadutilh.com/en/insights/the-dutch-future-pensions-act-five-things-you-need-to-know/
hmm…what was the IAM District 751 counteroffer?
Rolling Stones……”You can’t always get what you want
But if you try sometimes, well, you might find
You get what you need”
While most attention is focused on the strike, let’s not forget that this debacle is still ongoing in the background:
“A federal judge in Texas will hear arguments over Boeing’s plea deal in a 737 Max case”
“U.S. District Court Judge Reed O’Connor set a hearing for Oct. 11 in Fort Worth, Texas.”
https://finance.yahoo.com/news/federal-judge-texas-hear-arguments-223137759.html/
Continuing a brief discussion above with @ Frank P:
The shares that BA bought back over the past few years (treasury shares) are still there on the balance sheet — though their numbers have been declining, with 33 million sold in the past 3 years.
The number still on the balance sheet is still huge — as of 30 June 2024, there were 396 million of them, compared to 616 million shares in circulation. These 396 million shares had a nominal value of almost $49B in June, so why not just refloat them and grab that cash?
The answer might be related to the relatively low trading volumes in BA stock — around 7 million shares per day (compared to a volume of 285 million in the case of Nvidia, for example). If Boeing wants to sell shares without causing an excessive dip in daily share price, it would probably want to stay below about 5% of the daily volume — amounting to just 350,000 shares per day. LNA recently suggested that BA might want to sell 190 million shares — at a rate of 350,000 shares per day, that would take 543 trading days (essentially 2 full years)…which is much too slow in view of BA’s current financial dire straits. Selling at a faster rate would probably cause a sharp drop in share price — which would just rob Peter to pay Paul.
Let’s see how many treasury shares were sold in Q3.
Oh dear.
From WN’s investor slide deck, the airline’s Boeing 737 MAX firm order/options is as follows:
Firm orders 737-7 / -8 / Options
2024* 27 / 58 / –
2025 44 / 21 / 8
2026 59 / – / 27
2027 19 / 46 / 25
2028 15 / 50 / 25
2029 38 / 34 / 18
2030 45 / – / 45
2031 45 / – / 45
* 18 737-8 are received in 2024 as of Sept 26. Delivery of 20 737-8 is “planned” for 2024
So out of a total of 150 firm orders of 737-7 & -8 for 2024 & 2025, how many can Boeing delivery?
Any guess when the 737-7 will start delivery? Can Boeing deliver, say, more than 60 737-8 in 2024 & 2025?
With the ongoing strike, acute lack of cash, chronic lack of experienced/competent engineering manpower, nacelle heating issue, and newly-emerging gremlins like the rudder screw-up…does anyone truly believe that the MAX-7 is going to be certified within the next 18 months?
Huh, doesn’t every machinist of BCA have a six-figure income?
“The economic shift behind the strike at Boeing, where the average machinist makes *around $75,000* and wages haven’t kept up with the cost of living in the Pacific Northwest, now one of the nation’s priciest regions.
[Emphasis added]
https://x.com/dominicgates/status/1840771690118430955
“Three generations of Merwin family men have built their careers in Boeing’s factories, which used to promise a middle-class life for blue-collar workers. But that is no longer true for many workers.”
https://x.com/WSJ/status/1840771723949404580
WSJ: For This Boeing Family, the Job Is the Same. The Payoff Isn’t
https://t.co/kzxXyjTkd5
Boeing stock hits a 52-week low
I know some machinist and can verify that no most machinist do not make six figures. Currently only managers make that kind of money. The machinist I know lives 50ish miles away in order to own their own home. And their are many machinist that live near them for the same reason.