Boeing profit drops as charges in defence unit offset commercial jet recovery

Boeing reported encouraging trends in its commercial aeroplane segment, but further charges in its defence business weighed on net profit in its latest quarter.

Helped by an increase in deliveries of the 737 Max, chief executive David Calhoun said Boeing remained on track to achieve positive free cash flow, but combined charges of $240mn related to two of its defence programmes meant the company was still dealing with challenges in other parts of its business.

The aerospace giant reported total revenue of $16.7bn, down 2 per cent from a year ago, and below Wall Street forecasts for almost $17.6bn. Net income dropped by 72 per cent to $160mn.

Even after adjusting for pension payments and other expenses, Boeing suffered a loss of 37 cents a share, missing the adjusted loss of 14 cents a share forecast by analysts in a Refinitiv survey.

In the company’s defence, space and security unit, where revenues fell 10 per cent from a year ago to $6.2bn, Boeing took a $147mn charge related to its MQ-25 refuelling aircraft. It also took a $93mn charge related to Starliner, its space capsule that successfully completed a round trip to the International Space Station in May.

“We continue to work through hurdles on our fixed-price development [defence] programmes amidst a challenging macroeconomic environment, which had an impact on our results,” Calhoun wrote in a message to employees.

Elsewhere, commercial aeroplane deliveries rose 53 per cent, driven by the 737 Max. In an encouraging sign, Calhoun also said the company was “in the final stages of preparing to restart deliveries” of the 787 wide-body jet, as it works towards Federal Aviation Administration certification following production flaws.

Boeing Global Services, which provides aeroplane maintenance for governments and airlines, returned to pre-pandemic levels earlier than expected, thanks to the recovery in demand for air travel.

Boeing had operating cash flow of $100mn in the second quarter and expects free cash flow to be positive for the full year.

“Supply chain constraints and inflation continue to challenge our world — and our industry is no exception,” said Calhoun. “While we are making progress, we have more work to do.”

Boeing said Boeing was at a “pivotal moment” as it sought to turn itself round after the crashes of two 737 Max jets in 2018 and 2019, and production delays throughout its commercial and military programmes.