Air Force One to drone tankers: Boeing’s defense program hit with cost overruns
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.
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