Boeing Defense, Space & Security (BDS) took a hit, too
January 29, 2025
The seven-and a half week (53 day) strike by the International Association of Machinists & Aerospace Workers (IAM) affected the very factories in the Pacific Northwest that produced airframes for Boeing’s commercial-derivative products, such that just ten 767-based KC-46A Pegasus tankers were delivered in 2024 (three less than in 2023) and none were handed over during the last Quarter. This contributed to the US $800 million loss suffered by the KC-46 programme in 2024. During an earnings call on 28 January, Boeing chief financial officer Brian West said that “The fixed-price development cost pressures were driven by the… KC-46, primarily reflecting higher estimated manufacturing costs, including the impacts of the IAM work stoppage and agreement.”
The halt of 737 production affected the P-8A Poseidon maritime patrol aircraft, just four of which were delivered (seven less than in 2023), while delivery of the first E-7A Rapid Prototype airframe for modification slipped to January 2025.
But Boeing Defence, Space and Security also suffered losses on programmes unaffected by the strike, delivering just 110 aircraft last year: down from 157 in 2023.
The T-7A advanced jet trainer programme was responsible for a US $500 million loss, driven by higher-than-estimated production costs on contracts in 2026 and beyond,” West said.
BDS delivered what had once been expected to be the final two of five engineering and manufacturing development-phase examples of the T-7A to the US Air Force in 2024, though there will now be four further production-representative test vehicles (PRTVs), and approval of the vital ‘Milestone C’ production decision has been delayed from 2025 until 2026. This will delay the T-7A’s initial operational capability until the Spring of 2027 – three years later than originally planned.
Boeing’s ‘spin’ on this was that: “In January, the US Air Force announced an updated acquisition approach for the T-7A Red Hawk that allows the company to provide a production-ready configuration to the customer prior to low-rate initial production, which better supports the operational needs of the customer and reduces future production risk.”
It is noteworthy, however, that only two of the EMD aircraft were originally delivered to the Integrated Test Force at Edwards AFB, and these had to be augmented by one of the notionally “Production Relevant Jets,” built for the T-X competition assessment phase.
The PRJ aircraft is fitted with a spin-recovery parachute and has been used to open up the high angle-of-attack envelope, while the first of the two EMD aircraft at Edwards is used for loads, noise, and vibration testing and the other for flutter testing. A third EMD aircraft spent much of 2024 in the McKinley Climatic Laboratory in Florida before going back to St. Louis for technical order validation and verification. The fourth EMD aircraft was used for ground testing in support a new flight control law, and the fifth aircraft flew for the first time from Boeing’s St Louis plant in Missouri on Dec. 13, 2024 and was only handed over to the US Air Force after that.
Boeing says that the four new PRTV aircraft (being delivered long after the originally planned IOC date) will reduce the risk of concurrency on the much delayed programme.
Boeing secured a contract worth US $9.2 billion in 2018 for at least 350 T-7As for the USAF. But delays and problems mean that Boeing has lost money on the fixed-price development contract, incurring significant financial charges over the last few years. This seems to form part of an emerging pattern – in which Boeing secured potentially contracts by submitting lowball bids, expecting to lose money in development and initial production lots then profiting later in the programme. Unfortunately, technical problems, development delays, supply chain difficulties and inflation have pushed any profitability much further into the future.
Boeing CEO Kelly Ortberg said that: “We’re focused on actively managing all of our problematic programmes to improve the performance for the company and our customers.
While there’s no silver bullet on these fixed-price programmes, I do feel better about our ability to better manage their performance in 2025.”
The smaller number of aircraft deliveries is also down to reduced numbers of aircraft coming off the St.Louis production lines, with disruptions associated with the F-15EX ramp-up and the F-18 production wind-down. Thus Boeing delivered 14 F-15s and 11 F/A-18E/F Super Hornets in 2024, four of the Eagles and six of the Super Hornets being delivered during the fourth quarter. In 2023 handed Boeing delivered nine F-15s and 22 Super Hornets.
To round off the bad news, deliveries of Boeing’s military rotorcraft fell from 99 in 2023, to 69 in 2024.
Apache numbers reduced from 77 (20 new and 57 remanufactured) in 2023 to just 50 (16 new and 34 remanufactured) in 2024. CH-47 Chinook transport helicopter numbers went from 20 in 2023 (11 new and nine remanufactured) to 13 in 2024 (four new and nine remanufactured).
BDS ended the year with an order backlog of US $64 billion, with more than 29% ($18.5 billion) from international customers.
