Boeing's defense division turned a profit in the second quarter of this year, the company revealed today, a marked shift after it has consistently taken on significant charges in previous quarters.
“Our renewed efforts around baseline and risk management of these programs are producing early results,” CEO Kelly Ortberg told investors in a call to discuss Boeing’s earnings results. “We have a lot of work to get these programs through the development phase, but I do like the direction we're headed.”
Boeing recorded an operating margin of 1.7% in the second quarter of 2025 for its defense programs compared to negative 15.2% in the same period last year. Revenue also jumped by about 10% to $6.6 billion from $6 billion in the second quarter of 2024.
The firm’s Defense, Space and Security segment booked a $110 million profit in the second quarter -- a stark difference to the $913 million it absorbed in the red this time last year.
A majority of Boeing’s defense losses are derived from its troubled fix-price development programs, including the new Air Force One VC-25B jet, KC-46A Pegasus tankers, T-7A Red Hawk training jets, MQ-25 Stingray uncrewed aircraft and Starliner Commercial Crew spacecraft.
Each has routinely taken on huge charges due to supply chain disruptions and concurrency in building production aircraft while also testing or certifying its design, the company has said.
On the T-7 program in particular, the Air Force in January announced a strategy to shift its development and procurement plans by pushing milestone C back one year to fiscal year 2026 and offering Boeing a ceiling of $250 million to address long-standing delivery delays and a need for updated capabilities.
So far, the company has cleared five milestones under the new agreement, which was signed Jan. 10. Two were reached in the first quarter of this year and three in the second.
“In the second quarter, we achieved three additional [engineering and manufacturing development] milestones outlined in the MOA,” Boeing told Inside Defense. “These were related to escape system and indirect lightning testing along with high-intensity, radiated-field testing at Patuxent River Naval Air Station.”
Also part of the new acquisition roadmap, the company received a formal award from the Air Force in the second quarter of 2025 to build four Red Hawk production-representative test vehicles -- to be delivered in FY-26 -- using FY-25 research, development, test and evaluation dollars. The idea, the service has said about the new plan, is to expand testing capacity and allow the airmen to start evaluating outstanding risks or requirements for the trainers.
In the third quarter of last year, Ortberg called for the company to pivot back to prior success in its defense business via better discipline within "tough contracts" and a focus on risk management in future ones.
The defense division’s swing toward profitability in this quarter can largely be attributed to those culture change efforts, Boeing executives said during the call today.
“Overall, the defense portfolio is well positioned for the future, and we still expect the business to return historical performance levels as we continue to stabilize production, execute on development programs and transition to new contracts with tighter underwriting standards,” according to Chief Financial Officer Brian West.
But Boeing is not out of the woods just yet.
The company is on the brink of a work stoppage by workers in Missouri and Illinois, where its fighter jets and other military programs are under production. About 3,200 mechanics and other workers represented by the International Association of Machinists and Aerospace Workers voted on Sunday to reject Boeing’s latest contract offer.
Although the existing contract expired on Sunday, any strike action would not occur until Aug. 4.
Boeing has been significantly expanding its St. Louis facilities to support production of the Air Force's sixth-generation fighter jet, known as the F-47.