WASHINGTON — Boeing reported a virtually 14% drop in its protection enterprise gross sales in the newest quarter, pushed partly by a $402 million cost on the KC-46A Pegasus tanker program.
In earnings launched Wednesday, Boeing reported almost $5.9 billion in protection gross sales within the final quarter of 2021, a drop from $6.8 billion within the fourth quarter of 2020. Boeing’s working margins additionally slipped into detrimental territory at -4.4% within the quarter.
The corporate attributed the gross sales decline primarily to “decrease quantity and fewer favorable efficiency throughout the portfolio,” together with the KC-46 cost.
Boeing Chief Monetary Officer Brian West mentioned in a convention name with buyers the pre-tax cost of $402 million was largely pushed by “evolving buyer necessities” for the tanker’s Distant Imaginative and prescient System, in addition to manufacturing unit and provide chain disruptions, together with issues stemming from the COVID-19 pandemic.
The Pegasus’ imaginative and prescient system, a community of cameras and sensors increase operators use to information the refueling increase into different plane, has continued to be a severe challenge for the plane. Customers of the unique imaginative and prescient system had issues seeing the picture or with distorted photographs in sure lighting circumstances.
The Air Drive and Boeing in 2020 determined to exchange it with a redesigned model. However the Air Drive mentioned earlier this month it has not but accepted the finished design of RVS 2.0, months after the design evaluate was initially anticipated to be closed.
Boeing President Dave Calhoun mentioned Wednesday the Air Drive stays enthusiastic concerning the KC-46′s efficiency.
“We don’t really feel nice about [the charge] by any respect,” Calhoun mentioned. “However the tanker right now is an unimaginable asset for our buyer, and now serves 70% of the missions that have been supposed within the growth of the tanker. And our job is to proceed to ship the tanker and to do it extra expeditiously as we transfer ahead.”
Air Mobility Command mentioned in early January the general growth of RVS 2.0 stays on schedule. However AMC determined to maintain the evaluate open till it may possibly work out easy methods to transfer ahead on fixing technical dangers with the panoramic visible system.
Requested to explain evolving buyer necessities, Boeing spokeswoman Deborah VanNierop mentioned it was “continued RVS 2.0 growth to incorporate the panoramic show challenge.”
Boeing, which is on a fixed-price contract for the tanker program, has repeatedly needed to pay expenses on it since 2014. By the top of 2020, Boeing had paid extra in value overruns — topping $5 billion — than the $4.9 billion preliminary worth of the contract. The newest expenses convey that whole to greater than $5.4 billion.
The final KC-46 cost got here within the fourth quarter of 2020. The corporate a yr in the past attributed that $275 million cost primarily to program inefficiencies, partially brought on by the COVID-19 pandemic.
Nevertheless, sturdy efficiency all through the remainder of the yr helped the corporate climate the final quarter’s decline. Boeing logged $26.5 billion in protection gross sales in all of 2021, a 1% enhance over its 2020 revenues.
Stephen Losey is the air warfare reporter at Protection Information. He beforehand reported for Navy.com, protecting the Pentagon, particular operations and air warfare. Earlier than that, he lined U.S. Air Drive management, personnel and operations for Air Drive Instances.