Boeing's Billion-Dollar Dilemma: Navigating Crisis in 2024
In a staggering reflection of its ongoing challenges, Boeing reported losses nearing $1 billion each month throughout 2024, culminating in a total loss of $11.8 billion—the company’s worst financial performance since the covid pandemic’s peak in 2020. Compounding the situation were significant quality control issues, a damaging workers’ strike, and a safety crisis that rekindled public concern about the company’s commitment to safety.
Key Incidents and Challenges:
A serious quality control failure surfaced when a door panel detached from a new 737 Max shortly after takeoff, indicating improper installation.
This incident not only highlighted Boeing’s internal quality control problems but also pointed to failings at its main supplier, Spirit Aerosystems.
The reaction from regulators led to production curtailments and calls for extensive safety and quality improvements.
CEO’s Response:
New CEO Kelly Ortberg, appointed in August, is focused on restoring trust and making essential changes to overcome the turbulence. However, he faced immediate challenges, including:
A seven-week strike involving 33,000 workers, primarily from the Seattle area, which halted key production lines for the 737 Max and 777. This labor dispute was largely rooted in worker dissatisfaction with pay and retirement benefits.
Following the strike, Boeing announced layoffs of 10% of its workforce and planned to raise over $20 billion through stock sales and loans to stabilize its financial standing.
Production and Delivery Gaps:
Boeing delivered 348 commercial aircraft last year, significantly lagging behind its major competitor Airbus, which delivered 766. Additionally, the introduction of the 777X, a delayed new long-haul aircraft, has now been pushed to 2026.
Defence Division Struggles:
Beyond commercial aviation, Boeing’s defense division lost more than $5 billion primarily due to rising costs associated with fixed-price military contracts, making these issues less visible but equally damaging.
Ortberg concluded that the company is making headway in stabilizing its operations while focusing on improving safety and quality, all aimed at regaining lost trust among a broad spectrum of stakeholders including customers, employees, suppliers, and investors.