"an investment in additional production and certification resources," Boeing said, as the company logged a $280 million charge on the VC-25B program in its second-quarter results.
The $280 million charge and cumulative losses on VC-25B
Boeing announced a $280 million charge tied to the VC-25B — the planned Air Force One replacement — pushing the program's cumulative losses above $3 billion, according to the company's second-quarter disclosure. The company attributed the charge specifically to "an investment in additional production and certification resources," a move Boeing said was intended to reduce risk as the aircraft moves into flight testing.
Chief Executive Kelly Ortberg acknowledged the sting of the write-down while stressing schedule priorities: "While the charge is disappointing, we recognize how critical schedule performance is to our customer and we are investing accordingly to maintain our commitment to deliver the airplane in 2028," he said. Ortberg added that "This shouldn’t overshadow all the meaningful progress we’re making to reduce the risk across our defense portfolio, and we are in much better shape than we were two years ago."
How the charge affected Boeing's defense margins
The VC-25B write‑down pushed Boeing's defense unit into negative operating margins for the quarter. Chief Financial Officer Jay Malave told investors he remains confident the unit "will return to high single-digit margins by the end of the decade," signaling management expects recovery but placing that return several years out.
Schedule, testing, and the company's stated approach
Boeing has said it will modify and test the VC-25B aircraft as it seeks to meet the revised timeline. Steve Parker, Boeing's defense CEO, told reporters ahead of the Farnborough Airshow that the company projected future losses on VC-25B to keep the program on track for a 2028 delivery. Parker declined at that time to say when Boeing would record those charges, citing the silent period before earnings, but confirmed the company "had begun the process of modifying aircraft, with the intent to begin testing next year on the first VC-25B."
Parker framed the work as non-negotiable on safety and specification: "Our focus is making sure that we get these aircraft right, safe to operate, [and that] they meet every technical specification," Parker said. "And we won’t compromise anything."
Contract terms, federal payments, and delivery timing
The VC-25B program is a firm, fixed-price effort for which Boeing is financially responsible for all cost overruns under a deal agreed to by President Donald Trump in 2018 that set a $3.9 billion ceiling for the effort. The program has slipped from an original 2024 delivery target to a revised schedule aimed at delivery in 2028.
The Air Force told Breaking Defense in December it had awarded Boeing a $15.5 million contract modification for communications equipment to be integrated on the presidential airlifters, bringing the cumulative value of the deal to just over $4.3 billion. That Air Force spokesperson said the new work would be accomplished "within the current program schedule," and that the first aircraft was projected to arrive "in mid-2028." Boeing is slated to upgrade and deliver two of the aircraft.
What this means for Boeing, the U.S. Air Force, and NASA
- Boeing: The company is absorbing increased near-term costs to protect the 2028 delivery target. Management has explicitly tied charges to resources for production and certification and projects a gradual margin recovery by decade's end, but the write-down pushed the defense unit to negative margins this quarter.
- The U.S. Air Force: The service has continued contract work and funded a $15.5 million modification for communications systems, while publicly maintaining the program schedule that foresees the first VC-25B arriving in mid-2028.
- NASA: While not a party to the VC-25B award, Boeing's CEO singled out NASA's Starliner program when discussing other fixed-price efforts. Ortberg said, "We’ve got to work with NASA to align on how the launches are going to be—both the crewed and uncrewed launches going forward," and that the company needed to do more work with NASA to lower Starliner-related risks.
Other fixed‑price programs Ortberg referenced
Ortberg also discussed several other fixed-price development programs where Boeing has faced challenges in the past. He characterized the KC-46 tanker as at "a very low risk" of further cost overruns as the current contract winds down and new terms can be negotiated with the Air Force. He described MQ-25 and the T-7 as having "normal risks" without identifying specific problems. By contrast, he named Starliner as the program where Boeing "needs to do more work to lower the risk of future charges," citing uncertainty around how future launches — crewed and uncrewed — will be handled.
The VC-25B entry into flight testing and continued investments in certification resources are concrete steps toward the company's stated mid‑2028 delivery goal, but the newly recorded $280 million charge and the program's cumulative losses above $3 billion underscore the financial strain tied to fixed-price development. Boeing has signaled it will spend to protect schedule and safety; the Air Force has kept the program timeline in public statements; and the coming year of testing will be the next tangible checkpoint for both parties.
