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Boeing’s defense unit to eat $1.7 billion in fourth quarter

Simon Osuji by Simon Osuji
January 24, 2025
in Military & Defense
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Boeing’s defense unit to eat $1.7 billion in fourth quarter
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Boeing’s defense business faced another tough quarter, with a projected loss of $1.7 billion when it reports its fourth-quarter earnings next week—bringing total losses for the sector to nearly $5 billion for the year.

“Defense, Space & Security expects to recognize pre-tax earnings charges of $1.7 billion on the KC-46A, T-7A, [Starliner] Commercial Crew, VC-25B, and MQ-25 programs,” the company reported today, ahead of its earnings call next week. 

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A major program contributing to the losses is the Air Force’s KC-46 tanker, which alone incurred $800 million in losses. The company blamed higher-than-estimated manufacturing costs and disruptions caused by last year’s seven-week workers strike. The T-7A trainer program took a $500 million hit this quarter, “primarily driven by higher estimated costs on production lots in 2026 and beyond,” according to the company. The remaining $400 million in losses come from other BDS programs: Starliner, VC-25 Air Force One, and MQ-25 refueler drone. 

Fixed-price development programs have been dragging down the company’s defense division, costing them billions of dollars. The company had secured high-profile contracts with lowball bids years ago, expecting to lose money in initial production lots but eventually turn a profit. However, supply chain issues and inflation have resulted in continued losses.

“Although we face near-term challenges, we took important steps to stabilize our business during the quarter including reaching an agreement with our [International Association of Machinists and Aerospace Workers]-represented teammates and conducting a successful capital raise to improve our balance sheet,” Kelly Ortberg, Boeing president and chief executive officer, said in the company statement. “We also restarted 737, 767 and 777/777X production and our team remains focused on the hard work ahead to build a new future for Boeing.”

Last October, Ortberg announced  that Boeing would  cut 10 percent of its entire workforce, roughly 17,000 people, in order to “position” itself for the future, and that it would try to improve its numbers by “doing less” and cutting non-core defense programs, possibly its space business.





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