It’s been a tough year for commercial plane manufacturer Boeing. As the past few months have been riddled with lawsuits, the company recently revealed that it has lost a great deal of money in the last quarter, due to lags in demand within the defense industry.
On July 31, the embattled company posted that it lost $1.44 billion in the second quarter, a much higher number than the $149 million reported losses from the same time last year. The company’s financial drain is impacted by both a lack of business and reduced manufacturing of commercial planes as it handles the legal battles waged against it for quality control issues.
Billions of dollars have been lost in the company’s Defense, Space, and Security unit alone—which is one of three primary businesses within Boeing—during 2022 and 2023. Company officials blamed this loss on overrunning costs for fixed-price contracts.
Prior to COVID-19, Boeing invested far more into these contracts but drew back from them after the pandemic because of related losses. In 2023, these losses amounted to $1.76 billion. According to the director of the defense unit, that portion of the company was “significantly challenged” this quarter.
In May, CFO Brian West predicted that Boeing will likely not be profiting this year, largely in part because of a stark decline in orders for jets to be delivered. One of its top products, the 737 MAX 9 aircraft, has significantly slowed in production due to a January 2024 incident in which a cabin panel fell off the plane after takeoff.
Only 92 planes were delivered during the second quarter of this year, a production decline of 32% compared to 2023. The ongoing struggles with the business have led to CEO Dave Calhoun deciding to resign by the end of the year, leaving the company to find his replacement.
The financial losses for Boeing come weeks after the company made a plea deal with the federal government in a case involving the fatal crashes of two 737 MAX jets a few years ago. The company conceded to plead guilty to a single conspiracy to defraud charge, costing it $487 million in fines, but sparing it nearly $25 billion requested by victim families.
