Boeing losses total almost a billion dollars this quarter
The hits to Boeing keep coming: In addition to the $1.5 billion it has had to write-off because of problems with its Starliner capsule, Boeing is now reporting losses in the third quarter totaling almost a billion dollars, with half those losses coming from overruns on its fixed price contract to provide Air Force One to the U.S. government.
The $482 million loss on the high-profile presidential plane was due to “higher estimated manufacturing costs related to engineering changes, labor instability and the resolution of supplier negotiations,” Boeing Chief Financial Officer Brian West said during the company’s third-quarter earnings call Wednesday.
Boeing has faced numerous problems with the VC-25B program, including shortages of workers and parts, that have delayed delivery of the first of two Air Force One jets until 2027. To date, the company has lost over $2.4 billion on the program, according to a company spokesperson. CEO Dave Calhoun said last year that Boeing should have never agreed to the fixed $3.9 billion price tag.
The second-largest contributor to losses for Boeing’s Defense, Space & Security (BDS) business was a satellite program that cost the company $315 million in the third quarter. The company wouldn’t identify the program, but West said the loss is “tied to customer considerations and higher estimated cost to deliver a highly innovative satellite constellation contract that we signed several years ago.” [emphasis mine]
Let me translate what CEO Calhoun was really saying in the highlighted sentence: “We want a blank check! Boeing is incapable of producing anything based upon a standard fixed price, and wants the federal government to go back to open-ended cost-plus contracts that put no limit to overruns and schedule delays.”
Whether Boeing gets that blank check or not really depends on Boeing. It is very possible our corrupt legislators in Congress — who think money grows on trees — will bring these cost-plus contract back, but I doubt Boeing will win many such contracts in the near future, based on its horrible performance on all levels technically. It needs to completely clean house, with major shake-ups in management and staff, as whoever is working there now is simply doing a terrible job.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
The hits to Boeing keep coming: In addition to the $1.5 billion it has had to write-off because of problems with its Starliner capsule, Boeing is now reporting losses in the third quarter totaling almost a billion dollars, with half those losses coming from overruns on its fixed price contract to provide Air Force One to the U.S. government.
The $482 million loss on the high-profile presidential plane was due to “higher estimated manufacturing costs related to engineering changes, labor instability and the resolution of supplier negotiations,” Boeing Chief Financial Officer Brian West said during the company’s third-quarter earnings call Wednesday.
Boeing has faced numerous problems with the VC-25B program, including shortages of workers and parts, that have delayed delivery of the first of two Air Force One jets until 2027. To date, the company has lost over $2.4 billion on the program, according to a company spokesperson. CEO Dave Calhoun said last year that Boeing should have never agreed to the fixed $3.9 billion price tag.
The second-largest contributor to losses for Boeing’s Defense, Space & Security (BDS) business was a satellite program that cost the company $315 million in the third quarter. The company wouldn’t identify the program, but West said the loss is “tied to customer considerations and higher estimated cost to deliver a highly innovative satellite constellation contract that we signed several years ago.” [emphasis mine]
Let me translate what CEO Calhoun was really saying in the highlighted sentence: “We want a blank check! Boeing is incapable of producing anything based upon a standard fixed price, and wants the federal government to go back to open-ended cost-plus contracts that put no limit to overruns and schedule delays.”
Whether Boeing gets that blank check or not really depends on Boeing. It is very possible our corrupt legislators in Congress — who think money grows on trees — will bring these cost-plus contract back, but I doubt Boeing will win many such contracts in the near future, based on its horrible performance on all levels technically. It needs to completely clean house, with major shake-ups in management and staff, as whoever is working there now is simply doing a terrible job.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
Sounds like they low balled the bid to keep everyone else out and now are like you said begging for more cash.
Back around 2015 I considered buying Boeing stock. I’m sure glad I didn’t.
Sounds like Trump was a genius to demand that DoD require a fixed price contract with B for AF-1.
See Perun’s video “How Incentives & Interests Shape Armies – Competition, Consolidation & Procurement Policy” and Boeing’s situation will make much more sense. His main point is that there is no need to resort to conspiracy theories, corruption etc. to explain why government procurement sucks. Even when everyone is doing their job exactly as they are supposed to, it still sucks. It likely always will. He makes many interesting points, but one big one is this – it is sometimes in a customer’s interest to keep a weak competitor such as Boeing alive to preserve long term competition. That one fact may be the sole reason for Boeing’s continuing existence. The company has been floundering for a long time but in many markets it serves(such as commercial aircraft) there would be a monopoly if it were to exit the market. Boeing doesn’t need to improve to stay in business. It just needs to kinda, sorta show up. Or at least look like they might when they get around to it.
“it is sometimes in a customer’s interest to keep a weak competitor such as Boeing alive to preserve long term competition”
In a totally different field, it brings to mind the well known fact that American railroads kept Baldwin Locomotive Works and American Locomotive Company (barely) alive in order to provide competition to GM’s Electro Motive Division in building diesel-electric locomotives. Baldwin exited the market in 1956 anyway and once GE entered the locomotive field in 1960, Alco was allowed to die in 1969.
So, $6.5B and counting for 2(!) jets? That were actually already built (the buyer went under while they were under construction)?
Note that the cost of a pair of Arleigh Burke destroyers or Virginia attack submarines, both pushing 10,000 tons’ displacement, is less than that. How on earth has Boeing managed to spend that much on a high-end refit job? Isn’t the WWIII-certified communications gear provided by the government?