Boeing squeaked out $1.2 billion in net earnings for the third quarter of 2019, despite a $40 million loss from operations in its commercial airplanes division.
The company was able to maintain a profit even though net earnings fell 53% from $2.3 billion for the third quarter in 2018, a large decline caused by the grounding of the 737 Max, the company disclosed in its financial filing with the Securities and Exchange Commission on 23 October. Sales and profits from its Defense, Space & Security and Global Services divisions made up the difference.
Commercial airplane revenue fell 41.2% to $8.2 billion for the third quarter of 2019, compared to the same period a year earlier. The division lost $40 million for the quarter compared to $2.03 billion in earnings from operations in the third quarter of 2018.
Boeing Defense, Space & Security third-quarter revenue increased 1.5% to $7 billion over the same period in 2018. That was primarily due to selling more satellites, weapons and the T-7A Red Hawk, the US Air Force aircraft formerly known as the T-X trainer, the firm says.
Earnings from operations for the defence division were $755 million for the third quarter. That’s compared to a $247 million loss in the third quarter of 2018. Losses last year were caused by development costs for the T-7A trainer and US Navy MQ-25 unmanned inflight aerial refueling tanker, as well as additional certification, design changes and flight test expenses on the KC-46A Pegasus in-flight aerial refueling tanker, the firm says.
Boeing Global Services revenues for the third quarter increased by 13.6% to $557 million compared with the same period in 2018. The company says that was mostly because of its acquisition of aerospace parts distributor KLX in October 2018 and growing revenue from services provided to international governments.
Earnings from operations for the services division rose 22.8% to $673 million in the third quarter of 2018, compared to the third quarter in 2018, the company says.
Part of Boeing Defense’s boost in revenue also comes from a lift in deliveries of new and remanufactured AH-64 Apache attack helicopters, as well as of KC-46A Pegasus in-flight refuelling tankers. Deliveries of those aircraft were previously delayed because of quality issues.
In fact, across all its military programmes, Boeing Defense delivered 77 aircraft in the third quarter of 2019, a 114% jump over the number of units it delivered in the second quarter.
The US Army suspended acceptance of all AH-64E aircraft in 2018 due to safety risks and inspection expenses related to the helicopter’s strap pack retention nut. Foreign object debris (FOD) found inside new KC-46As caused the USAF to suspend delivery of the tankers this summer, before resuming acceptance at a slower pace.
The US Army says it is now pleased with Boeing’s fixes for the AH-64E. The USAF says it accepted its first FOD-free KC-46A in September 2019 and is accepting tankers at about three per month.
Boeing Defense won a fifth production lot contract from the USAF for 15 KC-46A Pegasus in-flight aerial refueling tankers worth $2.6 billion on 1 October. The company is now on contract for 67 KC-46 tankers.
The company was also able to slightly increase its defence backlog by 0.8% to $62 billion in the third quarter of 2019, compared to the end of the year in 2018. The backlog was maintained with new contract awards for the F/A-18E/F Super Hornet, P-8A Poseidon, KC-46A tanker, and E-7 Airborne Early Warning & Control aircraft, Boeing says.