Boeing Loss Doesn’t Tell The Full Story

Analysts were expecting better results from Boeing today when it announced its Q2/HY1 2026 results. But behind the $435 million consolidated net loss for the first six months is a further improvement that should become significant in the coming quarters. The $435 million net loss compares with a $ 643 million year-over-year loss. The main driver is the $280 million loss in Defense and Space on the VC-25B program due to additional production and certification costs, with certification now to be completed by the US Air Force rather than the FAA. Consolidated earnings were up to $604 million from $285 million last year, while revenues were up 11 percent to $46.8 billion. The core operating margin turned positive to 0.6 percent versus -0.6 percent last year. Operating cash flow also improved to $1.2 billion from $-1.4 billion last year, but HY1 free cash flow remained at $-823 million. Q2 produced 8 percent higher revenues to $24.6 billion, a $156 million net profit from operations compared to $-176 million last year, and a $-428 million net loss versus $-612 million last year. The core operating margin stood at 0.0 percent versus -1.9 percent last year, the operating cash flow at $1.4 billion versus $227 million last year, and FCF at $631 million versus $-200 million year-over-year. Compare this to the Q1 results. “We are halfway through the year, and I am very pleased with the progress to execute our 2026 plan. With the continued focus on safety and quality, we are increasing production and delivering at levels we have not seen since 2018”, President and CEO Kelly Ortberg said on the earnings call. “We know there is more work to do and we are clear-eyed about managing the risks in front of us. But the momentum that we built in the first half of this year is setting us up for a more dependable performance as we execute the second half.” BCA Boeing Commercial Airplanes (BCA) produced 10 percent higher revenues in HY1 to $21 billion, thanks to 314 delivered aircraft. Still, the business unit produced an operating loss of $ 885 million, an improvement over $ 1.1 billion in 2025. The operating margin improved to -4.7 percent from -5.8 percent. Q2 revenues were up 8 percent to $11.8 billion, with the operating loss down to $-322 million from $-557 million. During the quarter, BCA delivered 171 airliners. The operating margin closed at -2.7 percent, up from -5.1 percent yoy. Speaking of commercial programs, Ortberg said he expects the amended type certificate for the MAX 7 “very soon”. The MAX 10 has recently completed its final test flight, with certification expected following the MAX 7. Deliveries will start in 2027, not only delivering on the promise to airlines of greater efficiency and capability but boosting Boeing’s financial position. CFO Jay Malave said free cash flow will already be strong in Q4 as the new MAX variants are delivered to customers. [caption id="attachment_196265" align="aligncenter" width="740"] Boeing 777-9 Dubai Airshow 2025[/caption] With 129 deliveries in Q2 and 243 in HY1, the MAX is well on track to meet 500 full-year deliveries, Malave said. Production is currently ramping up to 47 aircraft per month and will stabilise at that level for a while to monitor key performance indicators before increasing to 52. After that, rate brakes to 57 and eventually 63 are planned, but this requires stability within the supply chain. The new North Line in Everett is instrumental in getting to these higher rates. Ortberg repeated comments from previous earnings calls that the rate increase to 52 should be fine, as Boeing can depend on a strong inventory and the backing of suppliers. “But there will be more imbalance when going from 52 to 57, but there is nothing to be overly concerned about. Wing production needs to improve. We have flow improvements in place; let’s see how it goes.“ The integration of Spirit AeroSystems in Wichita is going according to expectations. “We are seeing continuous improvement in the quality of fuselages. I don’t see any challenges with the near-term rate brakes. We do have a massive effort going through the integration and getting our safety plans through the entire business. There is still work to do for the higher 737 rate ramps as well as for the higher 787 rates, but we have plans in place, and we are executing those plans.” 787 Production of the 787 is at eight aircraft per month. Ortberg said it was stabilised at this rate and temporarily slowed down several times since April to recover from supply chain issues. This includes GE Aerospace GEnx engines, which have been selected by a majority of recent Dreamliner customers. GE Aerospace President and CEO Larry Culp said that his company delivered sufficient engines to Boeing to keep production going, but Ortberg showed concern recently. During the earnings call, he said Boeing is working with GE on a corrective plan for deliveries. Seat issues will last for the remainder of the year, Ortberg said, although the situation has improved. This was demonstrated by the recent stream of deliveries to Riyadh Air, whose 787-9s had been sitting on the ground in Charleston until the premium seats had been certified by the FAA. Full-year guidance of Dreamliner deliveries is unchanged at 90 to 100 aircraft. 777X Certification of the 777-9 remains on plan for first delivery in 2027. Ortberg said that, right now, more than 55 percent of the certification flight testing has been completed, but Boeing is accelerating the pace during the summer. ETOPS testing under Type Inspection Authorization is expected to start later this year. Asked if 55 percent isn’t a bit low for a program that has been doing certification flying for some months now, Ortberg replied that “55 percent is pretty good. Remember, we have pre-dry-run those flight tests. One accelerator of the flight test program is our common test evaluation team that tests both programs. With work done on the MAX 7 and -10, it will apply some resources to speed up tests on the 777X. We keep achieving the milestones and have multiple aircraft in the air almost all days.” GE Aerospace will resume deliveries of the GE9X this third quarter after it paused following a cracked mid-seal that required a redesign of the affected part. Ortberg was also asked about the comments from Emirates President Sir Tim Clark, who said at last week’s Farnborough Airshow that he will not take delivery of 10 or 11 of the oldest 777-9s as they require too much rework. “I am not going to negotiate contract changes with our customer in public here. We have a plan. There are clearly some earlier aircraft that require more work to be done than others, but that was contemplated when we did our updates.” Contract negotiations Boeing has started early contract negotiations with engineering unions in Puget Sound, ahead of the contract aspiration in October. “We began these discussions early, because we want to work towards an agreement that supports our employees and their families, creates greater clarity for our business, and helps us stay focused on the progress we are making. So far, the tone of those talks has been respectful and productive.” He hopes this approach gives Boeing and unions time to negotiate a new collective labour agreement. But Ortberg added that Boeing is preparing for a work stoppage scenario, as happened at the end of 2024. “I am encouraged by the momentum we are building at Boeing as we move into the second half of the year. We had a great Farnborough Airshow last week”, Ortberg said. “Customers and suppliers I spoke with have renewed confidence in our team, products, and our ability to deliver on time with higher quality. The work we have done together over the last two years is making a difference. Our team is ready to meet the rising expectations.” Jay Malave remains confident that Boeing is on the right track to meet its mid-term target of $10 billion free cash flow. “We still have plenty of things to work on in 2026 and complete the milestones at the back end of the year. The building blocks are there, but we will be able to give you better clarity in time.”

No results