Boeing’s headquarters. Photo: Boeing

Losses on several defense and space programs combined with a wider loss in the commercial airplane building segment led Boeing on Wednesday to report a net loss in income despite strong sales growth in the airplane manufacturing and services businesses.

The Defense, Space & Security segment had a $527 million operating loss versus $71 million in income a year ago, largely due to a $257 million loss on NASA’s Commercial Crew program, $189 million on the Air Force T-7A trainer, and $68 million on the Navy’s MQ-25 unmanned aerial refueling aircraft. So far, during the life of these fixed-price development programs they have lost $1.4 billion, $1.3 billion, and $1 billion, respectively.

The fixed-price development programs make up about 15% of Boeing’s defense and space business. About 60% of the segment “is generating solid levels of performance in line with historical margins” and another 25% is struggling somewhat and is also losing money, Brian West, Boeing’s chief financial officer, said on the call.

West said a “handful of programs” make up the 25% of the portfolio that is not performing well, adding that there is a plan to turn them “positive” and the company is expecting defense and space operating margin to get to the high-single digit percent range in the 2025 to 2026 timeframe.

“We continue to see operational impacts from labor instability and supply chain disruption” from some of the other program that is depressing margins, he said, without identifying the programs. Some of the company’s factories “almost went dark during the pandemic and we’ve had to bring them back to life, and that takes time” to get workers and get them trained “to do some very complicated work,” he said.

Boeing’s defense margins “have to get better next year, period, full stop,” to get to the “trajectory” for the 2025 to 2026 goal, West said.

Sales of $6.2 billion at Defense, Space & Security were flat. Defense tallied $6 billion in orders and backlog rose 6% to $57.5 billion from $54.4 billion at the end of 2022.

Boeing’s net loss in the quarter was $149 million, 25 cents earnings per share (EPS), versus $160 million (32 cents EPS) in net income a year ago. Adjusted for pension costs, the core earnings loss was 82 cents EPS, six cents better than consensus estimates.

Sales increased 18% to $19.8 billion on the strength of higher aircraft deliveries and commercial and government work at the Boeing Global Services segment.

Boeing’s total backlog at the end of the quarter stood at $439.6 billion, up 9% from $404.4 billion at the end of 2022, driven mainly by a huge increase at the Commercial Airplanes segment on robust orders.

A version of this story was first published by Via Satellite sister publication Defense Daily.