Boeing will look to ‘do less and do better’: CEO

Boeing won’t be able to fix its ailing defense arm, which lost $2 billion this quarter, anytime soon, but the company’s CEO said Wednesday that its defense products are still core to the company. 

“It's going to take a lot of work. We're not going to be able to just wave a wand and clean up these troubled contracts. We signed up to some things that are problematic,” Boeing CEO Kelly Ortberg told investors during the company’s third-quarter earnings call—his first public comments since taking the job in August. 

Fixed-price development programs have been dragging down the company’s defense arm, causing billions of dollars in losses. But Boeing couldn’t walk away from these money-losing defense contracts “even if we wanted to,” Ortberg said. Instead, the company may consider cuts to other, non-core defense programs, he said.

“I think that we're better off doing less and doing it better than doing more and not doing it well, so we're in the process of taking an evaluation of the portfolio,” Ortberg said.

What might Boeing cut? In the defense sector, it will likely keep its aircraft and weapons programs, and try to offload most, if not all, of its space program. But it’s unclear if it could find buyers, said Richard Aboulafia, managing director for AeroDynamic Advisory, an aerospace consulting firm. 

“This is a question of buyers, not willingness to sell,” Aboulafia said. 

Sierra Space was at one point reportedly considering buying the joint Boeing-Lockheed rocket launch firm ULA, but the status of any such sale is still up in the air.  

Ortberg didn’t offer a list of what the company might shed, but said, “our core of commercial airplanes and defense systems are going to stay with the Boeing company for the long run, but there's probably some things on the fringe there that we can be more efficient with, or that just distract us from our main goal here.” 

The company aims to finalize decisions on what stays and what goes by the end of the year, Ortberg said. 

In order to get the current defense programs on track and prepare for future contracts, the company needs to focus on the things it can control, Ortberg said, such as how they estimate the total cost of a project.

“We know how to run these programs. We just have lost a little bit of discipline. I don't think our people are close enough to the people in the labs, on the factory floor, identifying what's keeping us from being successful, and so, we've made some changes in that regard,” Ortberg said.

During the call, Boeing executives also confirmed previously disclosed losses on the defense side: $2 billion on the T-7 trainer, KC-46 tanker, Starliner spacecraft, and MQ-25 unmanned refueler. 

“The magnitude of these losses expanded as we close the books, primarily reflecting higher estimated production costs on the T-7A program, mainly on contracts in 2026 and beyond, and an updated assessment of impacts on the KC-46A program associated with the IAM work stoppage and the decision to conclude production on the 767 freighter,” CFO Brian West told investors. 

Boeing machinists have been striking for more than a month now in the Pacific Northwest, which is hitting the company’s defense programs since those facilities also build the commercial-derived Air Force KC-46 tanker and Navy P-8 maritime aircraft. The workers will vote on a new contract Wednesday, just hours after Boeing released its earnings. 

During the earnings call, Ortberg said “first and foremost” the company has to end the IAM strike, and they’ve been “feverishly working” to find a solution. 

Following the start of the strike, Boeing announced it would cut 10% of its workforce, roughly 17,000 people. This dramatic cut was needed because Boeing is “inefficient” and has too much overhead, Ortberg said.

“I wouldn't think of it like we're going to take people off the production or out of the engineering labs. That's not our intent here. It's about getting ourselves more efficient and having a more lean and mean machine going forward, and I think that's going to be really important as we ramp up the production,” he said. 

As the company attempts to position itself for the future, it’s already started making leadership changes. Head of Boeing’s defense sector Ted Colbert was pushed out in September, though the company has yet to announce his successor. 

Asked about the replacement, Ortberg wouldn’t say whether they’d fill the spot with someone external or internal to the company, but said he’s “not averse to bringing in some additional resources to help the team, and I don't think the teams are averse to that as well.”