Boeing defense margins to remain flat in second quarter

(Reuters) -Margins at Boeing (NYSE:)’s defense unit will look similar in the second quarter to its first-quarter results, Boeing Defense CEO Ted Colbert said Sunday.

Margins at its defense unit were negative in the first quarter as Boeing recorded a $245 million pre-tax charge on the KC-46 tanker program. Colbert declined to say whether Boeing would take another charge on the KC-46, which has logged more than $7 billion in losses.

“We’re still assessing where the numbers are going to fall,” Colbert told reporters in a briefing ahead of the Paris Airshow. He added that there is a “ton of activity” to improve performance at Boeing’s defense unit but that it will take time for improvements to be seen.

Boeing remains focused on “starting every program the right way,” including a contract structure that gives Boeing a “fair shake and healthy business,” Colbert said. The defense unit’s large number of fixed-price development programs – including KC-46, the T-7 training jet and new Air Force One planes – have driven billions of dollars in losses.

Deliveries of the KC-46 have been stymied due to a supplier problem, and the company has yet to deliver a reworked KC-46 to the Air Force. Colbert declined to say when it will deliver its next tanker.