Boeing’s defense division has finally turned the corner toward profitability after absorbing billions in losses, but company leadership remains cautiously optimistic as they set their sights on the transformational Next Generation Air Dominance fighter jet contract.
At a Glance
- Boeing’s defense unit reported no losses in Q1 2025, a dramatic improvement from $4.9 billion in losses last year
- Progress made on troubled Air Force programs including the T-7 trainer and VC-25B presidential jets (Air Force One)
- CEO Kelly Ortberg warns that “victory” isn’t assured yet despite the positive financial turnaround
- The company’s Next Generation Air Dominance fighter jet contract represents a major strategic opportunity
- Boeing is selling non-core assets, including parts of its Jeppesen aviation solutions business for $10.55 billion
Defense Division Returns to Profitability
After enduring nearly a year of financial hemorrhaging, Boeing’s Defense, Space & Security unit has achieved a significant milestone by recording no losses in the first quarter of 2025. This marks a stunning reversal from the $4.9 billion in losses reported last year, signaling that the aerospace giant’s troubled defense division may finally be getting its financial house in order.
The turnaround comes at a critical time for Boeing, which has been battling financial difficulties across multiple major defense programs, including the T-7 trainer jet, VC-25B presidential aircraft (Air Force One), and KC-46 tanker.
Boeing CEO Kelly Ortberg, while encouraged by the recent performance, maintained a measured tone when discussing the results. The company has implemented more disciplined project management and cost containment strategies that appear to be bearing fruit. However, Ortberg emphasized that significant challenges remain before the defense division can be considered fully recovered. The division’s ultimate goal is to achieve high single-digit profit margins, a target that appears increasingly within reach if current progress continues.
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Progress on Troubled Programs
One of the most encouraging developments has been Boeing’s progress on previously troubled programs. The company has completed two incentive milestones on the T-7 trainer program as part of a revised agreement with the Air Force. This represents meaningful progress on a program that has previously cost Boeing over $1 billion in losses due to underbidding and delays. Similarly, the company reports that cost and schedule estimates for both the T-7 and the VC-25B presidential jets are now well-contained, suggesting better financial management of these critical projects.
“I’m not claiming victory here yet. We’ve got a lot of work to do on the [estimates to complete] on a lot of these programs, but I do think our discipline, cost risk management and active management with our customers to get to a win-win on these programs is helping. Obviously, our goal here is to get our defense business back up to a high-single-digit [margins] kind of performing business. And there’s no reason, I see, we can’t do that,” said Kelly Ortberg.
Boeing is also actively working to accelerate the timeline for delivering the new Air Force One jets (VC-25B), which have faced delays that could push delivery to 2028 or 2029. “On VC-25B, we continue to work with the customer to revise the program plan to allow for an earlier first delivery, while maintaining our focus on safety and quality,” Ortberg stated. Meanwhile, the company is addressing structural crack issues with its KC-46 tankers, which have temporarily halted deliveries, though Boeing maintains these do not pose safety risks.
Next Generation Air Dominance: A Strategic Win
Perhaps Boeing’s most significant achievement in recent months has been securing the Next Generation Air Dominance (NGAD) sixth-generation fighter jet contract. This contract represents a transformational opportunity for Boeing’s defense division and positions the company at the forefront of next-generation military aviation technology. Importantly, the NGAD contract is structured as a cost-plus incentive fee arrangement, which minimizes Boeing’s financial risk compared to the fixed-price development contracts that caused substantial losses on other programs.
“Clearly, we haven’t come off our strategy of ensuring we’re entering into the appropriate contract type for the appropriate type of work. So I wouldn’t worry that we’ve signed up to undo risk like we’ve done in some of our past fixed price programs, but that’s about all I can say on that right now,” added Ortberg.
As part of its broader financial strategy, Boeing is divesting non-core assets to strengthen its balance sheet. The company recently announced the sale of portions of its Jeppesen digital aviation solutions business for $10.55 billion, with Ortberg hinting at additional asset sales in the future.
These divestments come at a challenging time as Boeing faces headwinds from global trade tensions, particularly with China halting acceptance of new Boeing planes due to tariffs. Despite these challenges, Ortberg expressed confidence in Boeing’s financial outlook, emphasizing that contingency plans are in place to navigate potential disruptions to the company’s international business.
