Boeing plans more commercial crew charges

WASHINGTON — Boeing expects to take up to several hundred million dollars in additional charges against earnings for its CST-100 Starliner commercial crew program in the third quarter.

In a statement late Oct. 11, Boeing said it expects to report pre-tax earnings charges of $2 billion on four programs, including Starliner, in its Defense, Space & Security (BDS) business when it reports its third quarter financial results Oct. 23.

Of that $2 billion, $1.6 billion will be charged against two military aircraft programs, the T-7A and KC-46A. That leaves $400 million for Starliner and the MQ-25 drone, but the statement did not mention the charges for each of those programs.

Boeing has already recorded about $1.6 billion in charges over the life of the program, including $125 million in the second quarter. That number was certain to grow because of problems Starliner suffered on its first crewed flight this summer that led NASA to bring the spacecraft back uncrewed.

At the Aug. 24 briefing where NASA announced it would return Starliner uncrewed, NASA Administrator Bill Nelson said he had been assured by Boeing’s new chief executive, Kelly Ortberg, that the company would remain committed to the program.

“He expressed to me an intention that they will continue to work the problems once Starliner is back safely,” Nelson said, but added there had been no discussion about whether Boeing would be willing to shoulder the costs of an additional test flight to certify the vehicle for carrying astronauts to and from the International Space Station.

Starliner is one of several fixed-price programs that Boeing has struggled with. “In BDS, our performance on fixed-price development programs is simply not where it needs to be,” Ortberg said in a message to employees Oct. 11. “I will be providing additional oversight of this business and these programs.”

Ortberg also announced in the memo that Boeing would be laying off 10% of its workforce, or about 17,000 employees, as it grapples with both the problems at BDS as well as a strike affecting its commercial aviation business. The company did not disclose how specific parts of the company, including its space businesses, would be affected.

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