Boeing on Tuesday reported a $565 million loss on its KC-46 Pegasus refueling tanker in the fourth quarter of 2025, the latest for a program that has recorded billions in losses over the years.
In an earnings call with investors, Boeing chief executive Kelly Ortberg acknowledged the loss is “disappointing,” but said the company is seeing encouraging signs in the aircraft’s operational performance that bode well for the program’s future.
“If sustained, [that strong performance] should enable us to meet our customer delivery commitment and set us well for the next tanker order beyond the current program of record,” Ortberg said.
Chief financial officer Jay Malave pointed to the Air Force’s recent order of 15 more KC-46s as a positive development that contributed to Boeing Defense Space and Security’s $15 billion in orders during the quarter.
Boeing said the KC-46 charges were driven by higher supply chain costs and production support expenses at its facility in Everett, Washington.
Ortberg said most of the KC-46’s loss was due to higher costs on the 767 air frame that provides the basis for the tanker, so that charge does not reflect on other Boeing defense programs.
But some of those added production support costs will eventually help the company, Malave said. Boeing is pushing for higher quality levels and engineering support at its Everett factory, where KC-46s are made, and saw the amount of work that needed to be redone drop by 20% in the latter half of 2025.
“While these investments are starting to evidence progress, we need to sustain them for longer than previously planned, to promote stability,” Malave said.
Ortberg said that with the Pentagon keeping a close watch on how well defense contractors meet their delivery deadlines, Boeing has to keep investing resources to keep its standards and productivity high.
“We took that decision — albeit, a big gulp — to have to take a charge here on the tanker program,” Ortberg said. “I think it will pay off in dividends with us, in terms of allowing us to make sure we meet the 19 [expected KC-46] deliveries next year.”
This will be particularly important in the future, he said, since the Air Force has decided to buy more KC-46s on a sole-source basis until a future next-generation tanker arrives.
Ortberg said Boeing will have a clearer picture on what the follow-on batch of KC-46s will cost later this fall. And given the massive losses — more than $8 billion — Boeing has taken on the program so far, Ortberg said, the company plans to be “laser-focused on making sure we understand the cost base of that airplane.”
“This has been a bad contract for the last decade,” Ortberg said. “As we enter into a new opportunity where we get to reprice, we want to make sure that we … ensure it’s a fair contract and we can make money.”
Stephen Losey is the air warfare reporter for Defense News. He previously covered leadership and personnel issues at Air Force Times, and the Pentagon, special operations and air warfare at Military.com. He has traveled to the Middle East to cover U.S. Air Force operations.
