Boeing CEO Charts Course for Major Company Downsizing Amid Crisis

Boeing‘s (NYSE: BA) new CEO Kelly Ortberg, who relocated to Seattle from Florida upon taking leadership, is planning significant structural changes to downsize the aerospace giant while working to resolve a crippling machinists’ strike that began September 13. Industry insiders have begun considering “previously unthinkable” scenarios, including potential breakup or bankruptcy if the company maintains its current trajectory.

In a recent note to employees, Ortberg emphasized the need for Boeing to reduce its scope and concentrate on core operations. “We need to be clear-eyed about the work we face,” he wrote, indicating the company had spread itself too thin and requires fundamental restructuring.

A tentative agreement reached Saturday between Boeing and its largest union would provide machinists with a 35% raise over four years. The union is set to vote on Wednesday, the same day Ortberg will make his first public comments as CEO since assuming leadership in August.

The company is exploring the sale of various assets to generate essential cash flow while eliminating underperforming divisions. Boeing’s board recently convened at its Arlington headquarters to evaluate each unit’s performance and consider strategic options. The company has already reached an agreement to sell a small defense subsidiary specializing in military surveillance equipment and previously attempted to divest its rocket joint venture with Lockheed Martin.

Ortberg is seeking to raise at least $10 billion in cash while implementing widespread job reductions. The company faces immediate challenges, including an expected $6 billion quarterly loss and billions in additional charges. Credit rating firms have warned of possible downgrades to junk status if Boeing doesn’t preserve cash. The ongoing strike costs the company approximately $1 billion monthly.

The CEO’s strategy marks a departure from previous management approaches, earning praise from industry leaders like United Airlines CEO Scott Kirby, who commended Ortberg’s focus on raising equity to stabilize the company rather than pursuing stock buybacks.

Ortberg is also pushing for organizational changes, requiring executives to relocate closer to their operational units, contrasting with former CEO Dave Calhoun’s remote management style from homes in New Hampshire and South Carolina.

The restructuring comes as Boeing faces multiple challenges, including safety concerns following the Alaska Airlines door plug incident, delayed aircraft deliveries, and potential credit rating downgrades to junk status.


Information for this story was found via the Wall Street Journal, Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

2 Responses

  1. Boeing needs to become an engineering driven company instead of a stock buyback company pay their employees what they deserve

  2. Ortberg needs to eliminate several surplus mid- to senior-level executive positions, many of which were established more for political reasons than actual organizational needs, and restructure the entire organization top to bottom. Promote the right people with the right skill set to lead.

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