Boeing’s Space Business Takes a Hit from Starliner, Lagging Sales in 4Q 2019
Boeing Defense, Space & Security provided no silver lining for the overall company in its comparatively rough Fourth Quarter (4Q) and Full Year 2019 financial report. On Wednesday, The Boeing Company posted its first company-wide annual loss in 22 years, with Defense, Space & Security 4Q revenues and earnings from operations decreasing 13% and 96%, respectively.
The main culprit for the division’s losses was the failure of its Starliner capsule last month during its first unmanned mission to the ISS for NASA. The capsule failed to reach its intended orbit after launching from facilities in Cape Canaveral, Florida. However, Boeing said Defense, Space & Security suffered from lower volume across the portfolio, resulting in a combined $5.96 billion in revenue (compared to $6.87 billion in 4Q 2018).
The division’s 96% drop in operating margin was due to a $410 million pre-tax Commercial Crew charge primarily to provide for an additional unmanned Starliner mission for the Commercial Crew program. NASA is still evaluating the data from the failed mission to determine if another is even required.
Defense, Space & Security’s full-year losses were not as bad as the 4Q results. Full year revenues declined 1% from $26.3 billion in 2018 to $26.2 billion in 2019. Backlog at Defense, Space & Security was $64 billion, of which 29 percent represents orders from customers outside the United States, the company said.
The overall company is still reeling from losses in its Commercial Airplane business due to safety issues with its 737 MAX commercial jet. Boeing CEO David Calhoun, who is less than three weeks into his tenure after former CEO Dennis Muilenburg resigned January 13, said the company’s main objective is to return the 737 MAX to service. “We recognize we have a lot of work to do,” Calhoun said in a statement.