In first time since 2019, Boeing goes half a year without losses on defense programs
WASHINGTON — Boeing didn’t book any charges on its fixed-price defense contracts in the first half of 2025, the company announced today, marking the first time since 2019 that the aerospace giant’s defense business hasn’t reported a loss for two consecutive quarters, according to a review of regulatory filings by Breaking Defense.
“We have a lot of work to get these programs through the development phase, but I do love the direction we’re headed,” Boeing CEO Kelly Ortberg told investors in an earnings call today.
The reprieve to Boeing’s defense unit comes after a 2024 where it booked an annual record of $4.9 billion in losses on fixed-price programs like the KC-46 tanker, MQ-25 refueling drone and the new Air Force One program. Under the terms of those contracts, Boeing is responsible for paying for expenses past a certain threshold, and technical challenges, supply chain issues and inflation have all contributed to higher than expected costs.
This year, its fortunes seemed to have turned in a more positive direction, with the defense unit winning the Air Force’s sixth generation fighter program in March and a recent decision from the service to sole-source additional KC-46s.
Boeing will still need to “push through” the development phase for its existing fixed-price contracts, Ortberg acknowledged. But he added that the new CEO of the defense business — company veteran Steve Parker — is making progress by working with military customers on troublesome programs like T-7, which is performing better after Boeing and the Air Force came to an agreement on a new approach for the program.
“We want to get our BDS [Boeing Defense, Space and Security] business back to high single digit margins and see nothing that’s going to keep us from doing that,” Ortberg said. “As we’re entering into these new contracts, we’re following our process to make sure that we only enter into the appropriate contracting type. So [on] these recent big wins we have, the development parts of those programs is always cost- plus. So we’re not making the errors of the past and signing up for fixed-price development, high risk programs.”
One potential headwind is an imminent strike at the company’s production facilities around St. Louis, Mo., which produce combat aircraft like the F-15EX as well as weapons including the Joint Direct Attack Munition. On Sunday, about 3,200 members of the International Association of Machinists and Aerospace Workers (IAM) voted to reject Boeing’s contract offer, stating that “the proposal from Boeing Defense fell short of addressing the priorities and sacrifices of the skilled IAM Union workforce.”
The union has a seven day cooling off period, starting from the expiration of its prior contract on July 28, before the strike would begin.
Asked about the oncoming strike, Ortberg downplayed the potential impacts, saying that they wouldn’t reach the magnitude of last year’s machinist strike in Seattle, which lasted about two months and cost Boeing, its suppliers and its customers about $9.6 billion.
“The order of magnitude of this is much, much less than what we saw last fall. That was roughly 30,000 machinists,” he said. “So we’ll manage through this. I wouldn’t worry too much about the implications of the strike.”
“We want to get our BDS [Boeing Defense, Space and Security] business back to high single digit margins and see nothing that’s going to keep us from doing that,” Boeing CEO Ortberg said.
