Boeing's Turnaround Plan by CEO Kelly Ortberg

(Reuters) – Boeing CEO Kelly Ortberg laid out a turnaround plan on Wednesday, emphasizing a need for a "fundamental culture change" as the struggling planemaker deals with a crippling strike, rising debt, and increased cash burn.

Ortberg stressed the importance of improving performance in Boeing's defense business and its 737 MAX and 777 programs. He described Boeing (NYSE:BA) as "at a crossroads" following performance lapses that have disappointed customers and eroded trust.

"This is a big ship that will take some time to turn, but when it does, it has the capacity to be great again," Ortberg stated in a message to employees on his first earnings call as CEO.

His call to action comes in light of significant downsizing plans announced earlier this month, coinciding with a strike by approximately 33,000 workers that has affected production, notably of the 737 MAX jet.

As a former Rockwell Collins (NYSE:COL) executive who stepped into the CEO role in August, Ortberg expressed hope that a new contract proposal under vote would be approved, although analysts remain uncertain about its ratification.

This day is pivotal for the planemaker, already impacted by a regulatory cap on MAX aircraft production following a severe mid-air incident.

Ortberg mentioned that the cultural shift was a topic of discussion at a recent meeting with company executives.

"We need to prevent the festering of issues and work better together to identify, fix and understand root cause(s)," he noted. "I’ve introduced a more detailed business cadence to drive this change across the organization and the process is underway."

However, restarting production of the 737 MAX, 767, and 777 widebodies post-strike will pose fresh challenges given ongoing supply chain struggles in various areas.

Boeing must also persuade suppliers, who have announced furloughs and delayed investments recently, to support its production plans again.

"It's much harder to turn this on than it is to turn it off," Ortberg remarked concerning the factories and supply chain.

He acknowledged that Boeing has "a lot of work to do" before introducing a new airplane.

This includes stabilizing the business, enhancing execution on development programs, streamlining operations, and restoring the balance sheet to pave the way for the next commercial aircraft.

Although Ortberg did not address a possible capital raise, reports indicate it could be around $15 billion.

Boeing reported Wednesday a quarterly cash burn of $1.96 billion, a significant increase from $310 million a year ago. The adjusted loss per share widened to $10.44, and quarterly revenue fell 1% to $17.84 billion.