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SaltWire's Atlantic regional weather forecast for October 26, 2023 | SaltWireWASHINGTON - Boeing's defense business is proving harder to turn around than executives initially predicted, with supplier errors and high manufacturing costs contributing to $1.7 billion in losses this year on programs like the next Air Force One and NASA's Starliner capsule.
Boeing is unique among its defense contractor peers, as companies like Lockheed Martin, General Dynamics and RTX are seeing higher revenues due to demand from the war in Ukraine. Boeing's executives said they are putting in place new training and deploying resources to suppliers to ensure the unit moves from negative margins to high-single digit margins by 2025-2026, when its most troubled programs are slated to be past flight testing and on more stable footing.
These deals, which make up 15% of Boeing's defense program revenue, were reached before Boeing's commercial airplanes business was decimated by the MAX crisis and before the pandemic and high inflation caused costs to spike for materials and labor. Other headaches include a recent manufacturing snafu where a supplier improperly coated KC-46 fuel tanks.
However, the company's current fixed-price development efforts, which include the U.S. Air Force's KC-46 refueling tanker and T-7 training jet, new Air Force One planes, the Navy's MQ-25 tanker drone, and NASA's Starliner have all continued to run over budget this year.
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