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.
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.