Boeing Aims to Turn Around Its Damaged Brand—But Will It Work?

A Boeing 787-10 Dreamliner taxis past the Final Assembly Building at Boeing South Carolina in North Charleston, S.C., on March 31, 2017. Randall Hill/REUTERS/File Photo

News Analysis

From a collapsing stock to a series of public relations disasters, Boeing is looking to navigate the turbulence it has endured over the past few years.

Boeing CEO Kelly Ortberg, hired this past summer, aims to deploy a four-part plan to revitalize the $100 billion aerospace giant and reverse the downward trend the company has experienced since 2019.

In a memo shared with employees last week, Ortberg outlined his strategy.

First, the Boeing chief wants to change the company culture by having executives work on factory floors and engineering labs.

“We need to be on the factory floors, in the back shops, and in our engineering labs,” Ortberg stated. “We need to know what’s going on not only with our products but with our people.”

As Boeing grapples with multiple PR black eyes to the company brand, Ortberg wants to stabilize the business by ending the machinists’ strike and improving internal safety and quality-control systems.

“We have some really big rocks that we need to get behind us to move the company forward,” Ortberg said.

Next, he wants to bolster executive and management decision-making and discipline by increasing the understanding of various aircraft programs, allowing leadership to better manage risks and expectations.

While Ortberg wants to build a superior future for Boeing, he accepts that “we have a lot of work to do before then.” This will be achieved by laying the foundation and reforming the infrastructure to manufacture a leaner and more focused business, Ortberg said.

“This is a big ship that will take some time to turn, but when it does, it has the capacity to be great again,” he said.

Turning Things Around—What Experts Say

Can Ortberg and his team turn things around as Boeing experiences a tidal wave of problems?

The company is wrestling with federal investigations and whistleblower complaints stemming from four accidents and incidents involving the Boeing 737 this year, including one involving an Alaska Airlines flight that resulted in minor injuries.

Boeing’s reputation took a hit when NASA determined that Boeing’s spacecraft was not safe enough to return two astronauts home from the International Space Station. The mishap forced NASA to turn to SpaceX.

Earlier this month, a satellite produced by Boeing exploded after experiencing “an anomaly.”

The root problem for several of the corporate issues stems from “controversial leadership decisions,” says Olivia Thompson, a business consultant at the U.S. Chamber of Commerce.

A strike sign hangs from a post near a Boeing sign as Boeing factory workers and supporters gather on a picket line in Renton, Washington, on Sept. 15, 2024. David Ryder/Reuters

The 737 Max, she says, was rushed out the door “though there were clear signs of design problems,” and the final decision “was a disaster waiting to happen.”

“It really makes you question the leadership’s priorities and whether they’re making decisions that put people’s safety first,” Thompson told The Epoch Times.

“In my opinion, all these problems boil down to some seriously questionable calls by the people at the top and a corporate culture that might need a serious overhaul if they want to get back on track. It’s been a tough few years for them, and it looks like they’ve got a lot of work to do to turn things around.”

What would also help Ortberg is to appoint a “turnaround person at the head of each division,” Renee Fellman, an award-winning turnaround expert, said in an interview with The Epoch Times.

“It’s more than about culture change—the CEO needs to be able to see what needs to be done, recruit and retain the right people.”

Cents and Sensibility of Boeing’s Balance Sheet

Boeing stock has struggled in 2024, falling by about 40 percent year to date, to $155 a share.

Boeing reported a $6.1 billion third-quarter loss and told investors it would burn cash next year.

Boeing also launched an Oct. 28 secondary stock offering that could raise as much as $19 billion and boost its balance sheet as it revitalizes the organization.

In addition, the company recently announced it is cutting 10 percent of its workforce, totaling 17,000 jobs.

While these efforts might help its bottom line, they “may not do a thing to improve other outcomes,” according to Fellman.

“The company obviously has underlying management problems there. ... I am assuming that they have a lack of a system for ensuring accountability throughout the organization and talking about culture change,” she said.

“In terms of things that I see often, it’s having the wrong person in the right slot, and for the CEO, the CEO needs to be able to create a carefully conceived plan.”

Still, looking ahead, Boeing’s hefty internal costs will keep weighing the company down, she said.

“With all the setbacks they’ve faced with the 737 MAX, it’s pretty likely that these costs are going to keep dragging down their earnings this year—and maybe even next year, too,” Thompson stated.

Labor Action and Output Cap

Wall Street appears to be confident that Boeing will successfully turn the company around.

The analyst consensus is a “Buy” rating with a more than 27 percent upside price target of nearly $198.

“For Boeing, most of the bad news is out. There’s probably not much more that we’re going to see on the downside,” Tony Bancroft, a portfolio manager at Gabelli Funds, said in a note, as viewed by The Epoch Times. “Boeing has a good plan in place, and in the long term, it’s going to do well. Boeing is a good long-term value story and growth story.”

The near-term headwinds for Boeing, Bancroft noted, involve resolving the labor dispute and petitioning the Federal Aviation Administration (FAA) to lift its monthly production cap.

On the same day as its latest earnings report, the International Association of Machinists and Aerospace Workers District 751 rejected the company’s latest contract offer, extending the strike to its seventh week.

Sixty-four percent of union members voted on Oct. 24 against the contract offer, which included a 35 percent pay raise over four years, a $7,000 ratification bonus, and a one-time $5,000 contribution to workers’ Boeing 401(k) accounts.

“After 10 years of sacrifices, we still have ground to make up, and we’re hopeful to do so by resuming negotiations promptly,” Jon Holden, president of IAM District 751, and Brandon Bryant, president of IAM District W24, said in a joint statement.

The sticking point is Boeing’s resistance to reinstating the pension agreement it froze in March 2014. Like many other corporations, it transitioned from defined-benefit pension plans—pension liabilities mainly borne by employers—to a company-funded defined contribution retirement savings plan.

Meanwhile, in February, the FAA imposed a production cap of 38 airplanes per month for the company’s 737 MAX. FAA Administrator Mike Whitaker will not raise the output limit until the airplane maker’s safety processes are deemed sufficient.

“There have been comprehensive plans before, so I think the goal now is we really need to make sure that that’s executed,” Whitaker said at an industry conference. “We’ve capped production—that was my first conversation with the new CEO. We need to make sure the safety metrics are exactly where they need to be to grow.”

In the end, whether Boeing’s turnaround efforts are successful or not will “depend a lot on how they handle leadership restructuring,” Thompson stated.

“They’re going to have to approach this with a lot of care and thoughtfulness,” she said.