Boeing took a $2.8 billion hit to its defense unit in the third quarter of 2022, related to certain fixed-price development programs, including its Air Force One program.
Boeing already recorded a $660 million charge in the first quarter of 2022 related to “higher supplier costs, higher costs for finalizing certain technical requirements and schedule delays” of the Air Force program One. The first of the two aircraft is expected to be delivered in 2026.
In 2018, Boeing won a $3.9 billion contract in the US to build and modify two 747-8 commercial aircraft. The deal was made ahead of the appointment of current Boeing CEO Dave Calhoun in January 2020.
“Air Force One, I would just call a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn’t have taken,” Calhoun said on the first-quarter earnings call of the company in April. “But we are where we are, and we will deliver good airplanes. And we will recognize the costs associated with it.”
Other fixed-price development programs that contributed to the segment’s loss of $2.8 billion in the third quarter were the KC-46A, MQ-25, T-7A and Commercial Crew programs.
BOEING TAKES $2.8B HIT ON DEFENSE BUSINESS, MAINTAINS CASH FLOW GOAL
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In a statement Wednesday, Calhoun said he is focused on maturing Boeing’s fixed-price development programs, mitigating risks and delivering for customers.
“We remain in a challenging environment and there is more work ahead to drive stability, improve our performance and ensure we consistently deliver on our promises,” he added. “Despite the challenges, I’m proud of our team and the progress we’ve made to strengthen our company.”
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Boeing’s defense, space and security segment reported $5.3 billion in revenue in the third quarter. The segment’s backlog was $55 billion, of which 31% represented orders from customers outside the United States.
In the third quarter, Boeing received KC-46A tanker awards from the US Air Force for 15 aircraft and the Israeli Air Force for four aircraft. Poland also selected the AH-64E Apache as its future attack helicopter.
In addition, the company delivered 34 aircraft and two satellites, including the first four MH-139A Gray Wolf helicopters to the US Air Force, and opened its Advanced Composite Fabrication Center in Mesa, Arizona.
Boeing stock has fallen about 30% year to date.