Boeing has reported an unexpected loss of Air Force One after taking a hit from its Starliner programs


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Boeing posted an unexpected third-quarter loss on Wednesday after taking a hefty $2.8 billion charge related to its defense and space businesses, including new versions of Air Force One and the completion of the long-delayed Starliner space capsule.

The company also continued to report losses in its main commercial jet unit, even as increased shipments lifted revenue for the company in an otherwise disappointing red-ink quarter.

The charges in the defense and space businesses were for contracts where Boeing gets a fixed income from its government customers and is unable to overcome cost increases.

These programs include upgrading the 747 aircraft that will be the next generation of Air Force One. Delivery of these aircraft was again delayed during the quarter and will now not be completed for at least another four years.

The company is being paid $3.9 billion for the planes and has already taken $660 million in losses on the planes in the first quarter of this year. CEO Dave Calhoun said at the time that the contract was a mistake for the company.

Another source of the charge came from the Starliner program to build capsules to carry astronauts to the International Space Station. In August, Boeing delayed the long-delayed project’s first crewed flight to early next year. The charge also included a training aircraft for Air Force pilots, as well as tanker planes and drones used to refuel the planes.

The charge resulted in a $2.8 billion loss at the defense and space unit, compared with a $436 million profit in the same quarter last year. Boeing did not specify how much of that final charge was related to each program.

The commercial jet business delivered 112 planes in the quarter, up 85 from a year ago, including the resumption of deliveries of the 787 Dreamliner, which had been suspended by the Federal Aviation Administration due to quality control issues. Those increased shipments helped boost revenue 4% to $16 billion, which in turn helped Boeing post a positive cash flow in the quarter. But the commercial aircraft unit posted an operating loss of $643 million.

“While our cash generation was strong, our revenue and earnings were significantly impacted by losses from fixed-price development programs in our defense business, driven by higher estimated manufacturing and supply chain costs, as well as technical challenges,” Calhoun said. in a note to the workers

Boeing reported a net loss of $3.3 billion, much worse than the $132 million it posted a year ago. The company returned to profitability in the second quarter with net income of $160 million, while analysts polled by Refinitiv had forecast another net profit of $347 million.

The company posted an operating loss of $3.1 billion, compared with a narrow operating profit of $59 million a year earlier and a profit of $490 million on that basis in the second quarter of this year. Analysts had expected a profit of $648 million, rather than a massive loss.

The company said it should be cash flow positive for the year despite all the issues, which may have kept the stock from plunging on the report. Boeing ( BA ) , a component of the Dow Jones industrial average, was mostly flat early Wednesday.