Boeing reports $3.3 bn loss due to rising defense program costs

Wednesday, October 26, 2022 at 12:28 PM by © AFP 2022

Boeing reported a surprise $3.3 billion loss due to rising costs in its defense business. Photo: POOL / GETTY IMAGES NORTH AMERICA/Getty Images via AFP/File
Source: AFP

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Boeing reported a surprise $3.3 billion third-quarter loss Wednesday because of swelling costs on several defense programs due in part to supply chain expenses.

The aviation giant reported a four percent rise in revenues to $16 billion, which also missed analyst estimates.

On the up side, Boeing reaffirmed it is on track for positive free cash flow in 2022.

The company flagged a number of fixed-price defense contracts that have been hit with surging costs, including the KC-46, an aerial refueling and strategic military transport aircraft, and the US presidential plane, Air Force One.

Boeing also said costs were rising in other unspecified defense programs.

The losses in these projects were "driven by higher estimated manufacturing and supply chain costs, as well as technical challenges," Chief Executive Dave Calhoun said in a letter to employees.

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"Nearly every industry is navigating broad supply chain, inflation, labor and macro-economic challenges -- and we're certainly no different. We're realistic about the environment we face and are taking comprehensive action."

Calhoun closed his letter by saying that "turnarounds take time," adding "we have more work to do -- but I am confident in our team and the actions we're taking for the future."

The difficulties in Boeing's defense program came as the company saw a jump in revenues in its commercial airplane division following the resumption of deliveries of the 787 Dreamliner and an increase in deliveries in the 737 MAX.

But Boeing was expected to face questions on an investor conference call later Wednesday on the timing of the resumption of MAX deliveries to China and also on the regulatory outlook for its latest version of the plane, the 737 MAX 10, which has still not been certified by US authorities.