{"id":5471,"date":"2023-10-26T04:39:06","date_gmt":"2023-10-26T04:39:06","guid":{"rendered":"https:\/\/infundpros.com\/markets\/does-boeing-have-a-grip-on-whats-wrong-with-its-defense-business\/"},"modified":"2023-10-26T04:39:07","modified_gmt":"2023-10-26T04:39:07","slug":"does-boeing-have-a-grip-on-whats-wrong-with-its-defense-business","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=5471","title":{"rendered":"Does Boeing Have A Grip On What\u2019s Wrong With Its Defense Business?"},"content":{"rendered":"
\n

The division, with a string of big write-offs, leads the aviation giant in red ink.<\/strong><\/h2>\n

I<\/abbr>n its latest tale of woe<\/strong> on Wednesday, Boeing
\n BA
\n <\/fbs-ticker> was relatively upbeat that it would soon leave behind problems that slowed deliveries of 737 MAX commercial airliners over the past two months. It was harder for management to find happy talk about its defense and space division in its discussion of third-quarter results.<\/p>\n

\u201cDefense stinks it up again,\u201d summed up analyst Robert Stallard of Vertical Research Partners. Boeing Defense & Space logged a $924 million loss from operations in the three months ending with September, largely courtesy of the latest in a string of big write-offs, making BDS the biggest contributor to Boeing\u2019s $1.63 billion in red ink.<\/p>\n

There was one familiar culprit. BDS recorded a $482 million loss on the two 747s it\u2019s retrofitting to serve as new presidential planes, blaming higher manufacturing costs on engineering changes and \u201clabor instability.\u201d That brings total charges on the Air Force One replacement program to $2.4 billion.<\/p>\n

<\/fbs-ad><\/p>\n

There was also a new problem child. BDS wrote off $315 million on a satellite constellation project, on which the company offered scant details.<\/p>\n

The steady drumbeat of write-offs from BDS is worrying, wrote analyst Seth Seifman of JPMorgan. \u201cContinued charges suggest [management] lacks understanding of costs in the business, since each charge is an upward revision to cost expectations versus only three months prior.\u201d<\/p>\n

Even excluding charges, BDS still was in the red.<\/p>\n

On the earnings conference call Wednesday, CFO
\n CFO
\n <\/fbs-ticker> Brian West said BDS\u2019 performance was \u201cbelow expectations,\u201d blaming, once again, fixed-price contracts during the past decade on which the company bid low. That meant the winner had to swallow any cost overruns.<\/p>\n

Those contracts include the Air Force One planes and the MQ-25, a carrier-based aerial refueling drone that Arlington, Virginia-based Boeing is developing for the Navy. The company booked another $71 million in reach-forward losses on MQ-25 on Wednesday, blaming higher costs, following a $68 million charge in the previous quarter. That pushes total charges on the program past $1 billion.<\/p>\n

<\/fbs-ad><\/p>\n

There were no upward revisions on other fixed-price headaches, like the NASA Starliner project ($960 million in charges), KC-46 tanker ($7 billion) and T-7 trainer ($1 billion).<\/p>\n

\u201cWe acknowledge that we aren\u2019t as far along in this recovery as we expect it to be at this stage,\u201d said West.<\/p>\n

He asked analysts, once again, to look forward to 2025-26, when the company expects those fixed-price development contracts to be \u201cde-risked,\u201d and Boeing will benefit more from the strong demand for its Apache helicopters, missiles and other munitions due to instability in the Middle East and fears of China and Russia.<\/p>\n

Investors were unimpressed. Boeing shares were down more than 1% to $179.16 in midafternoon trading.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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