Boeing Reports Decline in 2016 Defense Revenue

Boeing’s 2016 commercial deliveries helped offset a decline in the company’s defense sector, according to the fourth quarter and year-end earnings report, which was released on Wednesday. Overall revenue dropped from $96.11 billion in 2015 to $94.57 billion in 2016. However, the company recorded an “operating cash flow record” of $10.5 billion in 2016, according to the report. Revenue at Boeing Military Aircraft decreased 18 percent from $3.2 billion in 2015 to $2.6 billion in 2016. Although the company checked off some important milestones last year, such as the first flight of its T-X trainer aircraft, it also faced some setbacks on its KC-46A tanker program. Boeing acknowledged last summer it couldn’t make the August 2017 deadline to deliver 18 KC-46A tankers. However, USAF awarded a $2.8 billion contract for the first two production lots of the new tankers just a couple months later. Boeing President and CEO Dennis Muilenburg said the company “continues to transition from development to production” in the tanker program, “with testing tracking to plan and no new technical discoveries” found in the fourth quarter. “We continue to see the tanker program as a profitable, long-term program for the company with a need for approximately 400 aircraft worldwide,” he said. The Air Force’s overall requirement for tankers is 450 and the KC-46 program calls for 179 aircraft. Boeing’s Network and Space Systems revenue also declined eight percent to $1.8 billion in 2016, which company Chief Financial Officer Greg Smith attributed to “lower planned satellite volume.” Global Services and Support also saw an eight percent decline, dipping from $2.6 billion in 2015 to $2.4 billion in 2016. However, the company did successfully upgrade the first 14 NATO AWACS systems last year.