Boeing logged another $250 million charge on the Commercial Crew program during the third quarter due of 2024 to schedule delays and higher testing and certification costs. Photo: NASA

Revenue for Boeing’s Defense, Space & Security (BDS) segment was flat in the third quarter of 2024, but loss from operations more than doubled as Boeing took charges on fixed-price programs in the segment, including the Commercial Crew program for NASA. 

Boeing reported third quarter financials on Wednesday as its machinists began a vote on a proposal to end their strike. CEO Kelly Ortberg told investors that Boeing needs to fundamentally change the culture of the business to restore Boeing to its former legacy, and the company is going through a portfolio review.  

Overall, Boeing reported $17.8 billion in revenue, down 1% from the same time last year. Loss from operations for the full company increased from $808 million in the same period last year to $5.8 billion with the impact of the strike and charges on commercial and defense programs. 

The BDS segment reported revenue of $5.5 billion in Q3, and a loss of $2.3 billion. This loss was more than double the $924 million loss in the same time last year. 

Results in the BDS segment included previously announced pre-tax charges of $2 billion on the T-7A Red Hawk training jet, KC-46A Tanker, Commercial Crew, and MQ-25 Stingray aerial drone programs. 

According to the company’s 10-K filing, Boeing logged another $250 million charge on the Commercial Crew program during the third quarter due to schedule delays and higher testing and certification costs. 

Boeing launched the Starliner spacecraft to the ISS in June, but the spacecraft experienced propulsion anomalies and returned to Earth without astronauts Butch Wilmore and Suni Williams. Wilmore and Williams remain on the ISS and are set to ride home on a SpaceX Dragon spacecraft in February. 

Separately, in recent days, a Boeing-built Intelsat satellite broke apart in orbit according to Space Force tracking. Intelsat confirmed the satellite is a total loss. This was not addressed on Wednesday’s investor call.  

Managing Contract Risks for BDS, Portfolio Review 

Boeing leadership has been open about the need to better manage contract risks in the BDS segment and the plan to improve margins for the segment. 

Speaking to investors on Wednesday, Ortberg laid out four focus areas to restore Boeing’s leadership: change the culture; stabilize business; improve execution; and build a new future. 

Ortberg said he is going through a review of Boeing’s portfolio to asses what adds value versus distracts. He told investors he doesn’t have a specific list of changes at this time. “Our core of commercial airplanes and defense systems are going to stay with the Boeing company for the long run,” he said. “But there’s probably some things on the fringe there that we can be more efficient with or that distract us from our main goal here.”

Ortberg said that the BDS business has not been doing enough work with customers to de-risk fixed-price programs and prevent EAC (estimate at completion) overruns. 

“It’s going to take a lot of work. We’re not going to be able to just wave a wand and clean up these troubled contracts,” Ortberg said. “We signed up to some things that are problematic. But we’re also really focusing on our bid and proposal activity, putting discipline around that to make sure that we absolutely understand the risks that we’re taking on as we enter into new contracts as well.”

Last month, Boeing announced that Ted Colbert, who led BDS for more than two years, left the company. Steve Parker, BDS COO will oversee the segment temporarily until Boeing names a replacement.

Ortberg said generally in terms of new leadership Boeing is looking internally but he’s “not averse” to making an outside hire.