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A Boeing 777X at the Dubai Airshow. (Photo: AirlineGeeks | William Derrickson)

Boeing and Its Labyrinth: In 2021, Manufacturer the Lost $4.3 Billion Due to Aircraft Defects

It is no surprise that 2021 was a bad year for aviation globally, however, for many players, a timid recovery began to be seen. In the case of Boeing, such recovery became visible in the last quarter but did not prevent a loss of $4.3 billion, pushed mainly by the production problems of its airplanes.

In the case of the 787 Dreamliner, the accumulated costs in this period reached $5.5 billion. The KC-46 Pegasus, of course, recorded a provision for production problems of $402 million.

For the first time in years, the good news comes from the 737 MAX: the production rate is already at 26 aircraft per month and will reach 31 before the end of the year. Chinese recertification, which is getting closer, will drive the rapid reduction of the backlog. Boeing’s cash flow synthesized the positive impact of resuming deliveries and generated the first positive quarter since the beginning of 2019.

Charges for the 787 Dreamliner include a $3.5 billion write-down to cover compensation to airlines for delivery delays and $2 billion in manufacturing costs stemming from the slow production pace and rework of completed aircraft.

In an internal memo sent to employees Wednesday morning, Calhoun said he sees the 787’s financial hit as “a long-term investment.”

In the meantime, the KC-46 continues to generate losses. The remote viewing system (RVS) continues to generate delays and write-offs, and under the terms of the firm-fixed-price contract signed with the USAF, until the force approves the aircraft and all its components, Boeing must pay the cost overruns out of its funds.

The bill so far comes to $5 billion, and while the RVS is expected to be completed this year after the redesign, the damage is done and the KC-46 as a product is unlikely to meet the company’s economic expectations.

Boeing once again decides to give up on the year and charge the write-offs of its troubled programs – those of the MAX and 777X it had charged in 2020 – in the hope that 2022 will finally, and after a good number of years, be a profitable period.

This article was written by Pablo Díaz for Aviacionline.

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  • Born in Argentina, with a regional focus and global reach, Aviacionline is the Spanish-speaking leader in Latin America.

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