Boeing Defence, Space & Security loses $2.8 billion as a result of fixed-price development programmes.

Revenue for Boeing's Defense, Space and Security business segment fell to $5.3bn in the third quarter of 2022, a reduction of about 20% from the third quarter of 2021.

While supply chain issues, harsh macroeconomic conditions, and inflation due to Russia's war in Ukraine can all be partially blamed for losses, key issues with leading programmes have contributed to some of the difficulties being encountered.

The KC-46A, VC-25B, MQ-25, T-7A, and Commercial Crew programmes, according to Boeing, have suffered losses of $2.8bn due to technical difficulties, supply chain expenses, and higher-than-anticipated production costs.

This significant loss stands out contrast to the Q3 2021 profit of $436 million. By the end of 2021, the KC-46 had accrued charges of $5.4 billion, which Boeing had to pay because it was a fixed-price contract.

However, according to Harry Boneham, aerospace analyst at GlobalData, Boeing’s defence offerings are “competitive” and continue to attract international and domestic orders that enable the unit to recover from current headwinds.

“For instance, in September 2022 Poland confirmed that it would procure 96 AH-64E from Boeing, an order which GlobalData forecasts could amount to approximately $11bn between 2022-2032.

“Additionally, whilst the number of F-15EX ordered by the US Air Force may be cut from the 144 originally stated, it is likely that deliveries will ramp up in the coming years. In FY2023, the USAF has budgeted $2.77bn to procure 24 platforms,” Boneham said.

According to GlobalData analysis, US defence expenditure is forecast to register a continuous annual growth rate of 2.0% to value $773.3bn in 2026.

To boost Pakistan’s defence capabilities, China has delivered the latest versions of its J-10 multirole tactical fighter aircraft. Pakistan also plans to induct block III variant of the JF-17 fighter in the future.

Additionally, the ongoing programme for eight Type-041 submarines, planned for delivery in 2022–28, includes four to be produced under license in Pakistan. Many other programmes for the acquisition of artillery and military drones have been ongoing or are planned for the coming years.

Sharma continues: “Pakistan has been leaning on China to procure multiple military equipment. The J-10 will strengthen its conventional deterrence posture, by replacing some of the Pakistan Air Force’s ageing fleet of Mirage III ROSE fighters and could potentially play a role in low-level maritime strike operations. They are expected to address the asymmetries in the region, enhancing the conventional capabilities of Pakistan.”

Additionally, after a hiatus of four years, the US Biden administration has approved a $450m F-16 fighter jet fleet sustainment programme to Pakistan. The US Defense Security Cooperation Agency (DSCA) notified that the planned transaction does not involve any new capabilities, weapons, or munitions.

Sharma concludes: “The decision by the US DSCA to allow PAF F-16s to be sustained helps Pakistan deal with an ageing fleet and difficult finances that hinder outright purchases and massive modernisation programmes. If the country continues to struggle financially, compounded by environmental disasters, it will find itself in a difficult position to modernise or maintain its fleet and a deterioration of the security apparatus in the country can lead to further security concerns in the region.”