Boeing’s defense unit, known as Boeing Defense, Space & Security (BDS), reported no losses in the first quarter of 2025, marking a turnaround in profitability after nearly a year of challenges. CEO Kelly Ortberg credited advancements on several complex programs but cautioned that the unit is not entirely out of the woods yet. Last year, BDS faced record losses totaling $4.9 billion.
The lack of losses in the first quarter is attributed to progress made on the Air Force’s T-7 trainer and the VC-25B presidential jets. Ortberg expressed optimism regarding cost and schedule estimates, stating they are “well-contained” but not ready to declare victory. He noted, “We’ve got a lot of work to do on the [estimates to complete] on a lot of these programs,” highlighting a goal of achieving high-single-digit margins for the defense business.
Regarding the T-7 program, Boeing has met two “incentive milestones” through a revised agreement with the Air Force, reached earlier in 2025. This agreement will provide funding to expedite components of the program and address issues not included in the original contract. Boeing has incurred over $1 billion in losses on this program after underbidding on the fixed-price contract, leading to significant delays.
Boeing is also collaborating with the government to accelerate the VC-25B program, which involves the new Air Force One jets. Deliveries, initially expected for the end of President Trump’s term, may now extend to 2028 or 2029, sparking criticism from Trump. Ortberg assured that the company is focused on revising the program plan for earlier delivery while maintaining safety and quality standards.
Despite the positive news in defense, Boeing continues to face challenges with its KC-46 tankers, which have had deliveries suspended since February due to structural cracks. The Air Force and Boeing have not communicated a timeline for resuming deliveries. However, CFO Brian West mentioned that the cracks are not a safety concern and the rework required is minor.
In addition to overcoming existing problems, Boeing announced a significant win with the Next Generation Air Dominance (NGAD) sixth-generation fighter jet. The company secured the NGAD engineering and manufacturing development contract in March on a cost-plus incentive fee basis. Ortberg reassured investors that Boeing would avoid assuming undue risk with this new contract type.
As part of his strategic turnaround plan, Ortberg is divesting non-core segments of the company. Recently, Boeing agreed to sell portions of its Jeppesen digital aviation solutions business to Thoma Bravo for $10.55 billion, indicating that further sales may follow.
Despite these measures, Boeing’s recovery may be complicated by external factors such as tariffs related to Trump’s global trade war, which have impacted commercial deliveries. China has suspended acceptance of new Boeing planes in response to these tariffs. Nevertheless, Ortberg remains confident in the company’s financial outlook and stated that contingency plans are in place to navigate these challenges.
