Boeing’s latest quarterly report has revealed significant losses in the company’s Defense sector, primarily due to fixed price contracts that had gone over budget.
The $858 million loss accumulated by Boeing’s Defense, Space & Security division contributes to the overall loss experienced by the company during the first half-year of 2022.
According to the report, the main culprits of the loss are the VC-25B, the T-7A Red Hawk, the KC-46A Pegasus and the MQ-25 Stingray programs. All four were fixed-price contracts, with the company being obliged to pay any expenses that exceeded the agreed budget.
The VC-25B, a new presidential aircraft which Boeing has experienced significant problems with, contributed the biggest share of the sum. The remainder was incurred by charges for the T-7A trainer, the MQ-25 refueling drone and the KC-46 tanker, all of which were suffering from issues with supply chains, according to Boeing.
The revenue of the Defense, Space & Security division dropped by almost $2.4 million in the first half of 2022, compared with the same period in 2021. According to the report, this was primarily due to the lower price of new KC-46 orders and lower production of P-8 Poseidon maritime patrol aircraft.
The company still delivered 81 military aircraft during the period, a slight reduction when compared to the first half of 2021, with the production rate of the F/A-18 and F-15 fighter jets decreasing.