Key Takeaways:
Boeing reported a core loss of $0.76 a share, more than double estimates, as a $280 million charge on the Air Force One program dragged its defense segment into the red.
"While we're making progress on our development programs, you're never done until you're done," Chief Executive Officer Kelly Ortberg said in a note to staff.
Revenue rose 8% to $24.56 billion, topping the $24.25 billion consensus. The Defense, Space & Security segment swung to an operating loss of $15 million from a $110 million profit a year earlier, as the VC-25B charge consumed the unit's earnings. Free cash flow flipped to $631 million from negative $200 million, and the total backlog hit a record $715 billion.
Shares rose 4% to $219.92, defying the headline miss, as investors focused on the cash generation and backlog growth. The $3.9 billion fixed-price VC-25B contract, awarded in 2018, forces Boeing to absorb every cost overrun until first delivery in 2028, keeping further charges a live risk.
Commercial Airplanes delivered 171 aircraft in the quarter, up 14% from a year earlier, with revenue of $11.75 billion. The segment's operating loss narrowed to $322 million from $557 million, as the 737 program began transitioning to a 47-per-month production rate. Certification flight testing is complete for the 737-7 and 737-10, with first deliveries expected in 2027.
The company ended the quarter with $20 billion in cash and investments and cut consolidated debt to $45.9 billion from $47.2 billion. Interest expense of roughly $600 million per quarter and $86 million in preferred dividends keep the margin for error narrow.
The $280 million charge raises the question of whether legacy fixed-price defense programs will keep siphoning cash from a commercial franchise that is finally producing it. Investors will watch the running charge tally on VC-25B and the 737-7 and 737-10 certification decisions as the next catalysts.
This article is for informational purposes only and does not constitute investment advice.
