(Editor's Note: This story has been updated to reflect comments made during Boeing's quarterly earnings call.)
Boeing reported today that its KC-46 tanker program saw a $402 million pre-tax charge in the final quarter of 2021, according to a breakdown of the company's Q4 results.
The latest charge to a program that has reported billions of dollars in out-of-pocket costs “is primarily driven by evolving customer requirements for a remote vision system, as well as factory and supply chain disruptions including the impact of COVID,” Brian West, executive vice president and chief financial officer, said during an earnings call today.
The news brings Boeing’s out-of-pocket costs tied to the program to some $5.5 billion -- pre-tax charges the company must cover to develop the KC-46A under officials’ 2011 contract with the Air Force.
That deal capped government exposure at $4.9 billion, a total Boeing surpassed last year, when the prime contractor crossed a threshold where it has expended more on development than its customer.
While David Calhoun, Boeing's president and CEO, told analysts during the call today the company doesn’t “feel great about [the latest charge] by any respect,” he touted the tanker as “an incredible asset for our customer.”
Specifically, he pointed to Air Mobility Command’s recent work to get the KC-46 approved for additional mission sets. AMC in December reported the tanker can support nearly 70% of all receiver aircraft that rely on refueling support from U.S. Transportation Command.
“Our job is to continue to deliver the tanker, and to do it more expeditiously as we move forward,” Calhoun added. “The good news is our customer likes the performance of the airplane and again, we intend to serve that need.”
Boeing last disclosed a pre-tax charge to the program in the fourth quarter of 2020. At the time, the $275 million overrun brought the company’s total charges to $5.1 billion.
To close out 2021, Boeing’s defense business generated $5.9 billion in sales during the final three months of the year, compared to $6.8 billion over the same period in 2020 -- a drop of 14%. The company’s release attributed the change “primarily due to lower volume and less favorable performance across the portfolio,” including the KC-46 charge.
Across 2021, the business reported $26.5 billion in sales, in line with the $26.3 billion from 2020.
In all, Boeing has delivered 56 KC-46 tankers to the service, according to a company spokeswoman.