Boeing takes $2.8 mth hit in defense business, keeps cash flow goal
Oct 26 (Reuters) – Boeing Co’s (BA.N) ailing defense unit on Wednesday recorded a $2.8 billion charge, but the US planemaker stuck to its forecast of generating cash this year despite struggling to raise commercial jet production due to labor and supply shortages .
Shares tumbled 4% after the results as cost overruns in Boeing’s defense, space and security segment have hobbled a recovery for the company trying to come out of successive crises by cashing in on rising air travel demand.
Both Boeing and its European rival Airbus SE (AIR.PA) have ramped up production of narrowbody jets, with Boeing delivering 112 jets in the third quarter compared to 85 jets last year.
That helped it generate a free cash flow of $2.9 billion in the quarter. It had recorded a cash burn of $507 million in the same period a year ago.
However, rising cost pressures over the last few months have hampered fixed-price contracts for US aerospace and defense firms, prompting an industry body to ask the US Congress for inflationary relief.
The planemaker said it took charges on its VC-25B program, commonly known as Air Force One, as well as on the KC-46A refueling tanker program, among others.
“Our revenue and earnings were significantly impacted by losses on fixed-price development programs in our defense business, driven by higher estimated manufacturing and supply chain costs,” Boeing Chief Executive Dave Calhoun said in a message to employees.
The company has appointed a senior troubleshooter Steve Parker to help turn