Boeing Looks to Shed Non-Core Units to Bolster Finances
In an effort to stabilize its fragile financial situation, Boeing is reportedly exploring the sale of non-core or underperforming units. This strategic move comes as the company faces mounting pressure from a series of crises that have impacted its production and reputation.
A Year of Turbulence
The troubles began on January 5 when a door panel blew off a 737 MAX jet in mid-air, prompting a series of events that would shake the company to its core. The incident led to the departure of Boeing’s CEO, a slowdown in production, and a regulatory investigation into the company’s safety culture. In September, 33,000 union workers went on strike, further exacerbating the situation.
Assessing Unit Value
In recent financial-performance meetings, new CEO Kelly Ortberg asked unit heads to evaluate the value of their respective divisions to the company. This exercise was followed by a board meeting where directors scrutinized reports and questioned division heads to determine the state of each unit. While Boeing declined to comment on the report, it is clear that the company is taking a hard look at its operations.
Labor Dispute and Financial Strains
The ongoing labor dispute with striking machinists has halted production of Boeing’s best-selling 737 MAX and its 767 and 777 widebodies, putting added pressure on the company’s already weak finances. A new contract proposal, which includes a 35% pay hike over four years, is set to be voted on by union members on Wednesday. Earlier this month, Boeing announced plans to cut 17,000 jobs and take $5 billion in charges, underscoring the urgency of the situation.
A Path Forward
As Boeing navigates this challenging period, the company’s willingness to shed non-core units and re-evaluate its operations may be a necessary step towards recovery. By streamlining its business and focusing on high-performing units, Boeing can work towards restoring its financial health and regaining its position as a leader in the aviation industry.
Leave a Reply