Boeing Co. said its losses deepened in the third quarter as fresh problems with its defense business added to supply-chain and regulatory woes in its commercial jet arm.
The Arlington, Va., aerospace giant reported a loss of $3.3 billion, compared with a $132 million deficit in the third quarter last year. Its results were weighed by $2.8 billion in charges related to programs including its troubled military refueling tanker and Air Force One replacement jets. Revenue rose 4% from a year ago to $16 billion.
The company missed analysts’ revenue and profit estimates but said it generated $2.9 billion in free cash in the third quarter, keeping it on track to end the year with positive cash flow. Boeing said an approximately $1.5 billion tax refund boosted its cash.
The per-share of loss of $5.49 compared with a 19-cent deficit a year earlier.
Boeing shares are down almost 30% this year, underperforming rivals. Jetliner deliveries have been slower than expected, and the defense business continues to lose money. Executives cited supply chain, labor shortages and inflation as difficulties.
Chief Executive David Calhoun said the company was making strides in its turnaround but that such efforts take time. Boeing has faced a series of engineering, manufacturing and regulatory problems since two of its 737 MAX jets crashed in 2018 and 2019, taking 346 lives.
“We’re making great progress. I feel good about our turnaround,” Mr. Calhoun said in a call with analysts Wednesday.
The company’s commercial jet business has dealt with supply-chain disruptions, including for new engines, that have hindered deliveries of 737 jets. Finance chief Brian West said Boeing expected to deliver about 375 of the narrow-body jets this year, the latest cut since a January estimate of 500. Monthly MAX deliveries are set to remain around 30 for the next several months, he said, slowing the pace of cash collection.
It also has faced regulatory hurdles with the latest versions of the 737, the shorter MAX 7 and longer MAX 10 models. Both have a year-end legal deadline to win certification by U.S. air-safety regulators. Without a congressional extension of that deadline, federal law may require Boeing to make costly and time-consuming overhauls to the airplanes’ cockpits. Mr. Calhoun said Wednesday he was confident Congress would grant Boeing an extension.
Boeing’s defense unit, which makes missiles and satellites as well as military aircraft, remains a drag on profits and cash. Rivals such as Lockheed Martin Corp. have reported higher quarterly earnings and launched huge share buyback programs.
The charges Boeing reported for the quarter stem from a series of fixed-price deals with the Pentagon it won after fierce contests. Programs including the KC-46A tanker, VC-25B presidential plane, a new training jet and Navy drone and the Starliner space taxi have all run into design and cost overruns.
Boeing has been left nursing big losses on the fixed-price contracts. The company on Wednesday said the defense unit charges were caused by increased manufacturing and supply-chain costs as well as technical challenges. Mr. Calhoun said the problems could persist for another 18 months.
The U.S. Air Force doesn’t expect the KC-46A tanker to be fully ready until 2025, more than five years behind schedule. It announced another 18-month delay earlier this month linked to completing and certifying the refueling system. The aircraft is flying and able to complete most missions, and Boeing continues to receive new orders for the jets.
The two 747 jumbo jets being converted to serve as Air Force One have been delayed multiple times. Supplier challenges and shortages of workers with classified clearances added to Boeing’s costs. Manufacturing and quality mishaps have contributed to problems with the program.
Boeing’s services arm is one of the few areas of profitable growth, mirroring those at rivals such as Raytheon Technologies Corp. as airlines have increased flying and bought more spare parts.
Boeing said revenue from its commercial jet arm rose 40% to $6.3 billion as it resumed deliveries of its 787 Dreamliner in late August. The company hadn’t been able to deliver the wide-body jets, which are often used on long-haul international flights, for much of two years due to manufacturing and regulatory problems.
The plane maker has benefited from resurgent demand for passenger jets as travel rebounds from the worst of the pandemic. On Wednesday, Alaska Air Group Inc. said it made its largest-ever commitment for new aircraft by exercising options to purchase 52 of Boeing’s 737 MAX jets and securing rights to buy 105 more.
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