Dodo Finance: Boeings Air Force One Losses Reach $1.3 Billion

Boeing, the renowned aircraft manufacturing company, recently reported a significant loss of $482 million on its VC-25B/Air Force One program. This brings the cumulative losses on the project to a staggering $1.3 billion. The defense and space unit of the company also took a hit, suffering a $350 million loss on an undisclosed satellite program.

Furthermore, Boeing incurred a $136 million charge on its MQ-25 refueling drone, which is being developed for the Navy. These losses have heavily impacted Boeing’s defense programs, totaling $1.02 billion in the third quarter. However, there were no charges announced for the T-7 trainer or KC-46 tanker programs.

The majority of these losses stem from Boeing’s defense programs, which are operating under fixed-price contracts. Numerous factors have contributed to the financial setbacks, including inflation, supply-chain issues, engineering changes, and labor shortages. The challenges faced by Boeing have been exacerbated by the dismissal of GDC Technics, the interior vendor for the VC-25B program, in 2021.

The VC-25B program, responsible for the production of Air Force One, is currently at least two years behind schedule. Boeing, however, remains determined to overcome these obstacles and deliver two exceptional airplanes. The company attributes the high costs of the program to estimated manufacturing expenses, engineering adjustments, labor instability, and negotiations with suppliers.

In addition to the VC-25B program, Boeing anticipates higher costs on its satellite program as it expands the constellation. Despite the financial setbacks, the company is actively working to improve its financial performance in the defense and space sector. This includes implementing Lean Manufacturing Program Management rigor, enhancing cost productivity, and enforcing stricter underwriting standards for future contracts while dealing with legacy agreements.

Boeing’s focus is also on mitigating risks and resolving issues in programs such as the KC-46 tanker. The company acknowledges the competition from Airbus with its A330 Multi-Role Tanker Transport but remains steadfast in maintaining pricing discipline for the next KC-46 contract. Ultimately, Boeing aims to rectify the financial setbacks it has faced and ensure its defense programs regain stability and success in the future.