Boeing reports quarterly loss on problems in Air Force One, tanker programs

Boeing reported a $3.3 billion quarterly loss Wednesday as problems in its defense unit countered strides in its commercial aircraft business.

The manufacturer, however, generated nearly $3 billion in free cash flow in the three months ended Sept. 30, up from outflows of $507 million a year earlier. Boeing reiterated its forecast to achieve positive free cash flow for the year.

Here’s how Boeing performed in the third quarter compared with analysts’ estimates complied by Refinitiv:

• Adjusted loss per share: $6.18 vs. expected earnings per share of 7 cents.
• Revenue: $15.96 billion vs. $17.76 billion expected.

The company’s shares were down more than 1% in morning trading.

Boeing’s third quarter revenue rose 4% last year to $15.96 billion, and its more than $3 billion quarterly loss compared with a $132 million loss a year earlier.

The Arlington, Virginia-based company reported losses of $2.8 billion in its defense unit on programs including the KC-46 tanker and Air Force One. The company previously disclosed losses of more than $1 billion associated with modifying two 747 jumbo jets to serve as Air Force One, a contract negotiated under former President Donald Trump. 

“We’re squarely focused on maturing these programs, mitigating risks and delivering for our customers and their important missions,” Boeing CEO David Calhoun said in an employee note Wednesday.

The trouble in the defense unit has piled up as Boeing’s commercial unit is recovering from the Covid pandemic, boosted by a rebound in air travel.

Boeing’s commercial unit’s revenue rose 40% from a year ago to $6.26 billion. It delivered 112 planes in the third quarter, up from 85 a year earlier. Deliveries of its 787 Dreamliner resumed in August after a pause for much of the previous two years to address a series of manufacturing flaws.

Alaska Airlines on Wednesday said it would exercise options to buy 52 Boeing 737 Max planes for its fleet and rights for 105 more of them through 2030. The Seattle-based airline said the order was the largest in its 90-year history and the new planes will be used to replace older planes and for growth.

But Calhoun and other aerospace executives have said supply chain problems and labor shortages are hindering increases in production.

“We’re realistic about the environment we face and are taking comprehensive action,” Calhoun wrote to staff Wednesday. “Within our production facilities, we’re not pushing the system too fast. We’re slowing down when necessary and working hard to ensure work gets completed in sequence.”

Boeing has struggled to stabilize after two crashes of its 737 Max, one almost four years ago in Indonesia and another in Ethiopia five months later, a crisis that grounded the jets around the world.

The manufacturer is now trying to win federal regulator approval of new versions of that aircraft, the 737 Max 7 and 10, the smallest and largest in the family. But Boeing faces a year-end deadline to do so without adding additional alerting systems for pilots, under new legislation passed in the wake of the crashes.

“We remain confident that we can get an extension of that deadline because this is the safe answer, CEO Calhoun said on a call with analysts on Wednesday. “We remain not just hopeful but confident that we can get this across the finish line.”