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Boeing lost $565 million on its Air Force KC-46 tanker program in the last quarter of 2025, according to a Thursday earnings call, pushing the company’s total losses on the effort to roughly $8 billion.
The loss on the Pegasus jet led to a $507 million loss for Boeing’s defense and space business in the fourth quarter, and a minus-0.5 percent operating margin for the full year, according to a press release. Boeing’s C-suite officials pointed to rising supply-chain costs and higher production support for the refueling aircraft—mainly tied to the 767 aircraft that is the basis of the KC-46s design—as the cause of the financial strain. But executives remained optimistic about future orders.
“As we came through our quarterly process, we revised cost estimates for elements, including the production support and supply chain,” Boeing CEO Kelly Ortburg said. “While it’s disappointing to recognize another impact on this program, we are seeing encouraging operational performance trends, which, if sustained, should enable us to meet our customer delivery commitment and set us up well for the next tanker order beyond the current program of record.”
Despite repeated accidents, financial hurdles, and delivery problems in recent years, the Air Force is still planning to buy 75 more KC-46s. Ortburg acknowledged those past headaches, but said the company now understands the full scope of the expenses. Negotiations on the next contracts begin in the fall.
“This has been a bad contract for the last decade, this existing contract,” Ortburg said. “And as we enter into a new opportunity where we get to reprice, we want to make sure that we … underwrite that contract, to ensure it’s a fair contract and we can make money on that.”
Boeing Chief Financial Officer Jay Malave said on the call that increasing production and engineering support at the company’s Everett, Washington, facilities led to a decrease of average factory rework levels “by 20% in the fourth quarter.” While those investments are paying off, he said, the increases will have to be sustained for a longer period of time to stabilize fixed-price-development programs like the KC-46.
“As the tanker charge this quarter highlights, there remains risks on these programs, even if the envelope of risk has been significantly reduced over the last year,” Malave said.
With the improvements, company executives said they plan to deliver more of the tankers in 2026.
“It is taking us more resources to make the deliveries,” Ortburg said. “We delivered 14 tankers in 2025 and we are planning to deliver 19 in 2026, and we made the conscious decision that we needed to keep resources at a higher level to assure that we make those deliveries on time.”
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22 Comments
I’m excited to see how Boeing will stabilize their fixed-price-development programs like the KC-46, and whether they’ll be able to make a profit on the next contract.
The fact that Boeing delivered 14 tankers in 2025 and plans to deliver 19 in 2026 shows that they’re making progress, but I’m concerned about the potential risks and challenges that still lie ahead.
I’m skeptical about Boeing’s ability to meet their customer delivery commitment, given the history of delivery problems with the KC-46 program.
But Ortburg said they’ve revised cost estimates and are seeing encouraging operational performance trends, which could help them get back on track.
The Air Force’s decision to still plan to buy 75 more KC-46s despite the repeated accidents and financial hurdles is a testament to the importance of the tanker program for their operations.
Ortburg’s statement that ‘it’s taking us more resources to make the deliveries’ highlights the complexity and challenges of the KC-46 program, and I wonder what kind of resources they’ll need to allocate to ensure success.
I’m concerned about the repeated accidents and financial hurdles the KC-46 program has faced, and I wonder if the Air Force’s plan to buy 75 more tankers is a good idea.
The KC-46 program has been a ‘bad contract’ for the last decade, according to Ortburg, and I wonder what changes they’ll make to ensure the next contract is more successful.
I’m curious about the role of the 767 aircraft design in the KC-46 program, and whether it’s a key factor in the rising supply-chain costs and higher production support.
I’m curious about the negotiations on the next contracts, which are set to begin in the fall, and how Boeing plans to ‘reprice’ the contract to make it more fair and profitable.
The total losses of roughly $8 billion on the KC-46 program are staggering, and I wonder what kind of impact this will have on Boeing’s future contracts and reputation.
The fact that Boeing’s C-suite officials pointed to rising supply-chain costs and higher production support as the cause of the financial strain makes sense, given the complexity of the 767 aircraft design.
The fact that the KC-46 program has faced repeated accidents and financial hurdles raises questions about the safety and reliability of the tankers, and whether they’re truly ready for deployment.
The $565 million loss on the KC-46 tanker program is a significant blow to Boeing’s defense and space business, and I’m surprised they’re still planning to deliver 19 tankers in 2026.
It’s true, but Boeing CEO Kelly Ortburg seems optimistic about future orders, which could help offset the current losses.
The KC-46 program has been a significant challenge for Boeing, but I’m hopeful that they’ll be able to learn from their mistakes and improve their processes for future contracts.
It’s interesting that Boeing Chief Financial Officer Jay Malave mentioned a 20% decrease in average factory rework levels in the fourth quarter, which could indicate that their investments are paying off.
The $507 million loss for Boeing’s defense and space business in the fourth quarter is a significant blow, and I wonder how they’ll recover from this loss in the coming year.
It’s good to see that Boeing is planning to deliver more tankers in 2026, but I’m concerned about the resources required to make those deliveries and whether it will be sustainable in the long term.
I’m supportive of Boeing’s efforts to improve their production and engineering support, and I think it’s a step in the right direction to reduce the risks associated with the KC-46 program.
I’m supportive of Boeing’s decision to keep resources at a higher level to ensure timely deliveries, and I think it’s a necessary step to ensure the success of the KC-46 program.
I’m concerned about the environmental impact of the KC-46 program, and whether Boeing has considered the potential effects of increased production and delivery on the environment.