Boeing Announces $2.8 Billion Hit in Defence Business

0
329
Airplane
Photo by John McArthur on Unsplash

Shares in Boeing Co. fell by 4% on Wednesday after the company recorded a $2.8 billion charge in its defense business. The U.S. plane manufacturer is experiencing rising costs as a result of the inflationary pressures that have been affecting fixed-price contracts for U.S. aerospace and defense firms. Such issues within the sector convinced an industry body to ask the U.S. Congress for inflationary relief.

“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 confirmed in a message to Boeing employees.

Despite such cost pressures, Boeing ramped up production of its narrowbody jets in an effort to maximize sales revenue, selling 112 jets in the third quarter compared to 85 jets during the same period in 2021. Such sales efforts resulted in the generation of a free cash flow of $2.9 billion in the quarter.

Although faced with the $2.8 billion hit, Boeing still projects that it will finish the year with a positive cash flow.