Boeing’s defense business is anticipating a challenging fourth quarter, projecting a loss of $1.7 billion. This loss is expected to bring total losses for the sector to nearly $5 billion for the year. The company reported these figures ahead of its earnings call scheduled for next week.
The Defense, Space & Security division of Boeing is set to recognize pre-tax earnings charges of $1.7 billion regarding multiple programs. These include the KC-46A tanker, T-7A trainer, Starliner Commercial Crew, VC-25B (Air Force One), and MQ-25 refueler drone.
Significant contributors to the losses stem from the KC-46 tanker program, which has incurred $800 million in losses due to higher-than-estimated manufacturing costs and disruptions from a seven-week worker strike last year. The T-7A trainer program has faced a $500 million loss this quarter, primarily related to increased estimated costs on production lots anticipated for 2026 and beyond. The remaining $400 million in losses arises from other BDS programs, including Starliner, VC-25, and MQ-25.
The fixed-price development programs within Boeing have been a significant factor in the ongoing losses in its defense division, resulting in billions in costs. These contracts were initially secured at low bids with the expectation of later profitability. However, issues such as supply chain disruptions and inflation have hampered that outcome.
Despite the near-term challenges, Boeing President and CEO Kelly Ortberg highlighted steps taken to stabilize the business during this quarter. These steps include reaching an agreement with the International Association of Machinists and Aerospace Workers and conducting a successful capital raise to improve the company’s balance sheet. Furthermore, production has resumed for the 737, 767, and 777/777X models.
In October 2022, Ortberg announced a plan to cut 10 percent of Boeing’s workforce, estimated at around 17,000 employees. This decision was part of a strategy to reposition the company for future success by focusing on core defense programs and potentially reducing involvement in the space business.
