The first T-7A Red Hawk flies over Edwards Air Force Base, Calif. Bryce Bennett/USAF
Boeing
Claims Progress on T-7 and Other Challenged Programs
April 25, 2025 | By John A. Tirpak
Boeing’s defense programs saw huge
losses in the past decade, but the company now says it has got those
issues under control and is steadily improving its performance and approaching
profitability. Boeing suffered no losses from defense programs in the most
recent quarter, a welcome improvement from 2024 when the company lost $5.4
billion on defense.
“We’ve made real good progress,” said Boeing
president and CEO Kelly Ortberg during the company’s April 23 earnings call.
Programs improving include the T-7 trainer, VC-25 presidential transport, KC-46
tanker, and Starliner space capsule
“I think we’ve got all these programs now,
well-contained,” he said. “I’m not claiming victory yet—we’ve got a lot of work
to do—but I do think our discipline, cost, risk management, and active
management with our customers to get to a win-win on these programs is
helping.”
Boeing is stabilizing its fixed-price contracts as
the programs mature. “This quarter results reflected stabilizing operational
performance, and we remain focused on retiring risk each quarter and ultimately
delivering these mission-critical capabilities to our customers,” Ortberg said.
Cracks discovered in KC-46 aileron hinges in
February—which triggered a temporary hold on new tanker deliveries—were
“identified … very quickly,” Ortberg said.
“It isn’t a safety-of-flight issue,” he said. “The
population that they had to [repair] was small. The rework, they could get to
that very quickly. So it really wasn’t a big deal.”
Since January when the Air Force and Boeing signed a Memorandum of
Agreement on how to proceed with the T-7, the program has
progressed, Ortberg said.
“We achieved the first two [Engineering and
Manufacturing Development] performance milestones outlined in the MOA,” Ortberg
said, “which continues to be an important example of how we are working with
our customers to find better overall outcomes for both parties.”
Under the deal, the Air Force is buying four
additional test aircraft—in addition to the five already accepted—that are of a
“production representative” configuration, in order to accelerate the test
program, already some two years behind schedule. The aircraft, bought with
research and development money, will be delivered in fiscal 2026. Assuming no
further substantive delays, the T-7 will be ready for operations in 2027, about
four years later than originally planned.
Overall, Ortberg said, “the defense portfolio is
well positioned for the future, and we still expect the business to return to
historical performance levels as we continue to stabilize production, execute
our development programs and transition to new contracts with tighter
underwriting standards.”
The call was the first since Boeing won the F-47
Next-Generation Air Dominance fighter contract in March, but
Ortberg said little due to government secrecy. “We’re not at liberty to
disclose anything relative to the contract structure beyond what the Air Force
has said,” Ortberg explained. The Air Force has said Boeing won the cost-plus
contract on the basis of “best value.”
“Clearly we haven’t come off our strategy of
ensuring we’re entering into the appropriate contract type for the appropriate
type of work,” Ortberg said. In past years, Boeing was guilty of underbidding,
but more recently the company has sworn off low-ball and fixed-price bids. Such
gambles have cost the company at least $10 billion over the past decade.
“So, I wouldn’t worry that we’ve signed up to …
undue risk, like we’ve done in some of our past fixed-price programs,” Ortberg
said. “But that’s about all I can say on that right now.”


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