Boeing’s total losses due to Starliner now equal $1.5 billion
According to CNBC, the total losses for Boeing due to its on-going and persistent engineering problems flying its manned Starliner capsule now equal almost $1.5 billion, not $1.1 billion as estimated yesterday.
Since 2014, when NASA awarded Boeing with a nearly $5 billion fixed-price contract to develop Starliner, the company has recorded losses on the program almost every year. The charges total $1.47 billion, according to its annual reports and the company’s most recent quarterly filing.
The annual losses have ranged from $57 million in 2018 to $489 million in 2019.
At this moment, the only way Boeing can make a profit on Starliner is to garner a lot of other tourist customers, outside NASA. The problem is that SpaceX’s already operational fleet of four manned Dragon capsules has captured that market, with a capsule and rocket that has demonstrated remarkable reliability. To convince others to fly on Starliner it will have to fly it a lot beforehand in order to convince others its problems have really been fixed. This will take time and money, which will only add to the red ink.
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According to CNBC, the total losses for Boeing due to its on-going and persistent engineering problems flying its manned Starliner capsule now equal almost $1.5 billion, not $1.1 billion as estimated yesterday.
Since 2014, when NASA awarded Boeing with a nearly $5 billion fixed-price contract to develop Starliner, the company has recorded losses on the program almost every year. The charges total $1.47 billion, according to its annual reports and the company’s most recent quarterly filing.
The annual losses have ranged from $57 million in 2018 to $489 million in 2019.
At this moment, the only way Boeing can make a profit on Starliner is to garner a lot of other tourist customers, outside NASA. The problem is that SpaceX’s already operational fleet of four manned Dragon capsules has captured that market, with a capsule and rocket that has demonstrated remarkable reliability. To convince others to fly on Starliner it will have to fly it a lot beforehand in order to convince others its problems have really been fixed. This will take time and money, which will only add to the red ink.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
So if NASA gave Boeing $5 billion, and Boeing has lost $1.5 billion, that means their total expenditure is at $6.5 billion, and rising. That just boggles the mind. What in the world are they spending that much money doing?
David Eastman: NASA hasn’t given Boeing $5 billion. In fact, it probably hasn’t paid Boeing more than $1 billion on this contract. It is a fixed price contract that only makes payments when Boeing succeeds at certain milestones.
Boeing $1.5 billion loss is the extra money it has had to dole out to try to get Starliner flying (so far in vain). This money cuts into its expected profit from the full contract.
David Eastman,
When Boeing bid on the project, they figured out how much they thought it would cost, and since it was fixed price they added in some margin for error, then they added in a profit. To give some numbers, let’s assume they thought they would spend $3 billion, added a 50% margin to make it $4.5 billion, then added in a 10% profit, bringing the bid to just under $5 billion. With this assumption, they have now eaten up their entire margin, will still spend the $3 billion, and any other losses now eat into any profit that they hoped to make on the project.
As Robert noted, Boeing could have made more money by renting space on Starliner to private companies, individuals, or other countries’ space programs. SpaceX has already sold and flown four such missions, making somewhere around $3/4 billion over the amount contracted with NASA for the manned Dragon. Although it is hard to be correct with counterfactuals, Boeing can be assumed to have captured half that market, so they may have lost out on around $400 million that they might have made in addition, if the original test flight and Starliner itself had performed well. These delays are costing Boeing opportunities for additional business. It is almost certain that Dragon will have a fifth private non-NASA flight before Starliner’s first manned test flight.
It could be worse than that for the rest of us. It is possible that instead of four private flights by now, there could have been eight, four with Dragon and four with Starliner. Well, maybe not eight, because there aren’t enough docking ports on ISS for much more than the two private flights that already went there.
I’m not a holder of Boeing stocks.
Don’t care.
Boeing as a contributor to the national economy; salaries, families, etc., I don’t care
Tax dollars are involved. Some of them are mine. I don’t have to think kindly of folks wasteful of my monetary needs for my family.
Pox on their house.
I’m making money on SpaceX. My family smiles.