TLDR:
- Boeing exploring sale of space division including Starliner capsule and ISS operations
- New CEO Kelly Ortberg aims to streamline company focus on core operations
- Ongoing 6-week labor strike has halted key aircraft production
- Company faces $3.1 billion loss in defense/space division through Q3 2024
- Boeing’s space program has fallen behind SpaceX in recent years
Boeing Co. is exploring the potential sale of its space division as part of a broader strategic review under new CEO Kelly Ortberg. The move, reported by the Wall Street Journal on Friday, would include the company’s Starliner space capsule and International Space Station (ISS) operations.
The aerospace manufacturer plans to retain its work on the Space Launch System (SLS), the rocket designed to carry American astronauts back to the moon for NASA. Boeing’s spokesperson has not yet responded to requests for comment on the potential sale.
The consideration comes as Boeing grapples with mounting challenges. A six-week labor strike has halted production of key aircraft, including the 737 Max. The work stoppage has worsened the company’s financial outlook, with Boeing now projecting continued cash burn into 2025.
During an October 23 earnings call, Ortberg emphasized the need for a more focused approach. “We’re better off doing less and doing it better than doing more and not doing it well,” he stated. The CEO, who took the helm in August, expects to complete his review of the company’s business portfolio by year-end.
Boeing’s space division has faced its own difficulties. The company reported an additional $250 million in cost overruns for the Starliner program this week. Total charges on the program have now exceeded $1.8 billion since 2016.
The defense and space division recorded a $3.1 billion loss over the first three quarters of 2024. These losses come as Boeing’s credit ratings hover near junk status, adding pressure to improve financial performance.
The potential sale marks a dramatic shift for Boeing’s space legacy. The company’s involvement in space exploration dates back more than 50 years to the Saturn V rocket that first carried humans to the moon.
However, Boeing has struggled to keep pace with newer competitors. SpaceX’s Crew Dragon capsule has completed 43 visits to the ISS since 2019, while Boeing’s Starliner has faced multiple delays and setbacks.
The labor situation remains tense. Members of the International Association of Machinists and Aerospace Workers recently rejected Boeing’s latest contract offer. Key issues include wage increases and pension benefits for new employees.
Boeing’s board has met to evaluate which divisions warrant continued investment. The company recently announced plans to reduce its global workforce by 17,000 positions, representing about 10% of employees.
Production challenges persist at Boeing’s facilities. Workers report pressure to move aircraft through assembly lines despite incomplete work to maintain schedules. A technician at the 737 Max factory in Renton, Washington, described facing pressure to “make miracles happen.”
The space division sale exploration follows Boeing’s ongoing efforts to sell its United Launch Alliance joint venture, co-owned with Lockheed Martin Corp. Potential buyers for Boeing’s NASA contracts could include Blue Origin, owned by Jeff Bezos.
Boeing’s stock showed a modest 1% increase following the news of the potential space division sale. The company’s strategic review continues as it aims to streamline operations and focus on core business segments.
The company’s restructuring efforts come after a challenging start to 2024, including increased regulatory scrutiny following a door panel incident on a 737 MAX in January.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support