Boeing Loss Widen to US$428 Million on Air Force One Costs

Boeing reported a second-quarter net loss of US$428 million, or 67 cents a share, as US$280 million in additional cost overruns on the VC-25B Air Force One presidential aircraft program pushed financial results well past Wall Street expectations, the company announced Tuesday.

Stripping out one-time items, the aerospace manufacturer posted an adjusted loss of 76 cents a share, more than double the 30-cent loss per share projected by consensus analyst estimates compiled by CNBC. Despite the earnings miss, quarterly revenue rose 8% year over year to US$24.56 billion, beating the consensus estimate of US$24.25 billion (also reported as US$24.60 billion). The top-line expansion was driven by a rise in commercial airplane handovers and broader business volume across defense, space, and security operations.

The quarterly performance highlights the ongoing financial friction within Boeing’s defense division even as its commercial manufacturing operations continue a gradual operational recovery following years of production disruptions and heightened regulatory oversight.

Defense Charges Drag Down Financial Performance

The US$280 million charge was incurred within Boeing’s Defense, Space & Security segment. The division swung to an operating loss of US$15 million for the quarter, down from an operating profit of US$110 million during the same period a year earlier.

Boeing attributed the newest expenses on the VC-25B program, the official designation for the modified 747-8 aircraft built to serve as Air Force One, to additional investments required for production and certification resources. The program has been repeatedly affected by cost overruns and schedule delays. The original 2018 fixed-price contract covered the modification and outfitting of two 747-8 airframes, with initial delivery originally scheduled for late 2024. Current timelines project deliveries in mid-2028 and mid-2029, though Boeing reaffirmed in its earnings release that it continues to target first delivery in 2028.

"While we're making progress on our development programs, you're never done until you're done," stated Kelly Ortberg, Chief Executive Officer, Boeing in a memo to employees.

Commercial Operations and Cash Flow Improvement

In contrast to the defense sector's losses, Boeing's Commercial Airplanes division demonstrated narrowing losses and rising delivery counts. Revenue for the segment reached US$11.8 billion, up from US$10.9 billion in the second quarter of the prior year. The commercial segment's operating loss narrowed to US$322 million from US$557 million a year ago.

During the quarter, commercial deliveries rose 14% to 171 aircraft, compared with 150 planes delivered during the same period last year. First-half commercial deliveries totaled 314 aircraft, marking Boeing’s highest first-half delivery tally since 2018. The single-aisle 737 program spearheaded these results, accounting for 243 of the total first-half deliveries.

Boeing's financial liquidity also stabilized during the quarter:

• Free Cash Flow: Generated US$631 million in free cash flow, reversing a US$200 million cash burn recorded in the second quarter of the previous year.
• Cash and Investments: Ended the quarter holding US$20 billion in total cash and short-term investments.
• Consolidated Debt: Reduced total consolidated debt to US$45.9 billion, down from US$47.2 billion at the beginning of the quarter.
• Order Backlog: Expanded to a record US$715 billion, which includes more than 6,200 commercial aircraft valued at US$597 billion.

Operational rate transitions also progressed. Boeing moved toward a manufacturing target of 47 737 MAX aircraft per month, supported by the opening of a fourth final assembly line in Everett, Washington, in July. The new line initially focuses on the 737 MAX 10 variant.

Certification efforts across pending programs remain ongoing with federal regulators. Certification flight testing has been completed for both the 737-7 and 737-10 variants, with the 737 MAX 7 currently in the final phase of the process. Boeing continues to anticipate regulatory certification for both variants in 2026, followed by initial deliveries in 2027. Additionally, the 777X wide-body program received Federal Aviation Administration (FAA) approval to launch certification flight testing under Type Inspection Authorization 4B, with first deliveries expected in 2027.

"While two quarters don't make a year, if we work together and stay focused on safety, quality and on-time performance, we'll improve our competitiveness and set ourselves up for a big second half," Ortberg told employees.

FAA Proposes Directives Following Seat Assembly Quality Notice

Separately, Boeing faces renewed scrutiny from US aviation regulators as Chief Executive Officer Kelly Ortberg works to overhaul factory quality control following an early 2024 accident in which a door plug panel detached from a nearly new Alaska Airlines 737 MAX during flight.

The FAA issued a proposed airworthiness directive on Monday following reports that passenger seat assemblies on certain 737 MAX aircraft were incorrectly installed into floor seat tracks. The agency warned that improperly anchored assemblies could disengage during severe turbulence, increased flight loads, or emergency landings, potentially injuring passengers and crew or obstructing aisle ways during an evacuation.

The proposed safety directive applies to 453 registered aircraft in the United States. According to aviation intelligence firm IBA, nearly 2,300 737 MAX jets are currently operating globally, including 823 registered in the U.S. Foreign civil aviation authorities frequently align their safety mandates with FAA directives.

The FAA estimated that each aircraft contains up to 69 track-mounted passenger seat assemblies. According to agency calculations, inspecting each assembly requires approximately one work-hour, with an additional work-hour needed to perform repairs if an assembly is misaligned. The fix requires no replacement parts, and airlines can assign multiple technicians simultaneously to reduce aircraft downtime. The regulatory agency did not specify a deadline for airline compliance.

In response to the proposal, a Boeing spokesperson confirmed that the airframe manufacturer had issued technical guidance to fleet operators in December 2025 regarding the seating issue.

"We support the FAA making that guidance mandatory," the Boeing spokesperson said in an email to Reuters.