Boeing’s defense sector is grappling with significant setbacks across three major programs: the Air Force One replacement, the T-7A Red Hawk trainer, and the KC-46A Pegasus tanker. These delays have raised concerns about the company’s ability to meet critical defense commitments.
The initiative to replace the aging Air Force One fleet with two Boeing 747-8 aircraft has encountered substantial delays.
Initially slated for delivery in 2024, the timeline has now been pushed to 2027 or 2028, with recent reports indicating potential delays until 2029 or later.
CEO Dave Calhoun later admitted the contract was “a very unique set of risks that Boeing probably shouldn’t have taken”, as the company now eats the cost of design changes and delays. The Air Force, which must keep the 30-year-old VC-25A fleet flying in the interim, has budgeted extra funds to sustain the current aircraft until the new ones arrive.
The delays have also drawn top political attention. “I’m not happy with Boeing…we gave that contract out as a fixed-price, and it’s taking so long,” President Donald Trump said in February, suggesting he might “look at other alternatives” for presidential transport if the schedule slips further. (White House officials have dismissed switching to a foreign aircraft, emphasizing they’ll push Boeing to get back on track.)
Boeing’s T-7A Red Hawk program – the Air Force’s next-generation jet trainer – has also hit turbulence. The first T-7A was supposed to be delivered in 2023, but initial operational capability is now delayed to 2028 according to budget documents.
Testing revealed serious issues that forced Boeing and the Air Force to pause and redesign parts of the aircraft. Notably, the T-7’s escape system (ejection seats) posed a risk to pilots of certain body sizes: 2021 tests found that some ejecting pilots could face dangerous concussions, excessive acceleration forces, or lose their helmet visor due to the parachute opening shock.
Until that was fixed, the Air Force would not let the T-7 proceed. Flight tests also uncovered a software-related “wing rock” instability – a tendency for the jet to wobble unexpectedly – which engineers had to resolve.
These technical fixes took time; as Air Force procurement officials noted, Boeing’s “inability to rapidly correct deficiencies” contributed to the schedule slipping further. Supply chain and production woes compounded the delays. Pandemic disruptions led to critical parts shortages, and quality problems with some components slowed the delivery of test aircraft. Boeing had delivered three T-7 test jets to the Air Force and planned to hand over two more, but those were held up by parts and supply issues, the company said. All told, the T-7 program is running at least two years late. Boeing has so far reported about $1.3 billion in losses on the T-7 – another fixed-price contract – after it underbid to win the project. (Industry analysts note Boeing intentionally bid low on several 2018 awards, expecting to absorb early losses and profit later.)
In the meantime, the Air Force has had to keep flying its 1960s-vintage T-38 Talon trainers far longer than intended. Those aging jets have suffered a series of crashes and safety incidents in recent years, underscoring the urgency for new trainers. Lawmakers have pressed the Air Force to field the Red Hawk as soon as possible, but budget constraints and testing realities mean production won’t ramp up until 2025-26 if all goes well.
Boeing’s KC-46A Pegasus tanker program, a high-profile effort to modernize the Air Force’s aerial refueling fleet, has faced repeated technical setbacks and delivery delays. The Pegasus – a 767 airliner modified into a tanker – was over two years late when the first aircraft was delivered in January 2019.
Early on, Boeing struggled with manufacturing lapses (debris left in planes triggered an Air Force halt in acceptance in 2018) and design deficiencies that proved stubborn to fix. The most notorious problem has been the KC-46’s Remote Vision System (RVS) – a network of cameras and screens that the boom operator uses to guide the refueling boom into receiver aircraft. Boeing’s initial RVS design produced distorted, low-contrast video in certain lighting conditions, sometimes making it hard to avoid scraping the boom against the aircraft being refueled. In-flight tests showed the original RVS could even make operators physically ill due to poor visual cues.
The Air Force deemed the RVS unsafe for routine use and withheld full combat certification of the KC-46 until a fix is in place. Boeing, at its own expense, has been developing a revamped RVS 2.0 with improved cameras and sensors. That upgrade was expected by 2025, but officials now say it will likely be 2026 before the new vision system is integrated and certified, partly due to the complexity of retrofitting it and FAA airworthiness approvals.
Another critical defect involved the KC-46’s refueling boom itself. The original boom design was too stiff, requiring receiving aircraft to exert more force than some lighter jets (like A-10 attack planes) could manage. This meant certain aircraft couldn’t be refueled until Boeing redesigned the boom. The Air Force and Boeing agreed on a fix involving a new actuator and software; that retrofit should be in place around FY2026.
Until then, the KC-46 fleet has an operational limitation: it cannot refuel A-10s and some other aircraft without the new boom, one of the reasons the tanker has not fully met all mission requirements. Despite these issues, Boeing has continued to deliver KC-46s (with interim fixes) to tanker units, and the Air Force has started using them on real-world missions in a limited capacity. As of late 2023, the Pegasus was cleared for combat deployment with most of the U.S. fleet (except those restricted by the boom issue).
However, reliability is still a concern. A recent Pentagon test and evaluation report found the KC-46A was “not meeting many of its suitability metrics,” with mission-capable rates well below targets and maintenance delays due to spare parts shortages.
In 2023, the Air Force briefly suspended KC-46 deliveries after finding small cracks in critical structures on a few new aircraft, requiring inspections and repairs.
Each hiccup like this further slowed Boeing’s handover of tankers.Financially, the KC-46 has been punishing for Boeing. The company won the contract in 2011 as a fixed-price deal, beating Airbus in a hard-fought competition, but has since racked up roughly $7 billion (and counting) in losses on the program.
Every time technical fixes or rework are required, Boeing pays out of pocket due to the contract structure. By late 2022 Boeing hoped the worst was over, but in 2023 the company still took another $800 million charge on the KC-46 for rising manufacturing costs, including impacts from a 7-week machinists’ strike that halted the 767 production line.
There are some signs of progress: over 70 Pegasus tankers have been delivered, and operational testing is gradually validating fixes. Air Force officials have expressed confidence that Boeing “has the right design” in place now and will get through remaining certification hurdles. The service even signaled interest in possibly ordering more KC-46s beyond the 179 planned, as part of its strategy to replace old KC-135 tankers. (Airbus had lobbied its A330-based tanker as an alternative for a future buy, but Boeing’s main rival dropped out of the running for the next tranche of U.S. tankers.) Still, until the Pegasus fully delivers on its promises, the Air Force must rely on some Eisenhower-era KC-135s to plug the gap, nearly 15 years after Boeing was first selected to build a twenty-first-century tanker.
Boeing’s struggles on these programs share a common thread: ambitious fixed-price contracts coupled with unanticipated technical complexity. In each case, Boeing agreed to develop cutting-edge defense systems at a set price, shifting risk from the government to the contractor.
Indeed, in 2018 Boeing swept up the T-7A trainer, MQ-25 carrier drone, and VC-25B Air Force One contracts – all on firm fixed-price terms – a portfolio that soon contributed to massive charges for the company. The Air Force’s KC-46 deal was similarly fixed-price.
These arrangements “turned into a ‘cautionary tale’” for the Pentagon, says former defense official Steven Grundman, underscoring the risks when a contractor underestimates a complex development effort. Fixed-price deals can work for straightforward procurements, but experts note they are less ideal for advanced prototypes where unknown problems inevitably arise. In Boeing’s case, each of the troubled programs encountered more difficulty than expected – whether due to design flaws (like the T-7’s ejection seat), integration challenges (KC-46’s cameras and boom), or external events (a supplier’s collapse on VC-25B).
Corporate decisions also played a role. During the 2010s, Boeing management was eager to regain defense market share and often prioritized aggressive bidding. Air Force Secretary Frank Kendall (who was the Pentagon’s procurement chief during the tanker award) admitted the service “didn’t look closely enough” at some KC-46 design risks and perhaps was too optimistic about Boeing’s offer. He later acknowledged a traditional cost-plus contract might have been wiser for such a development.
Boeing’s leadership, for its part, has signaled a strategic course-correction. “Rest assured, we haven’t signed any fixed-price development contracts [recently], nor do we intend to,” Boeing CFO Brian West told investors, emphasizing that the company learned its lesson. The contractor has also pulled back from certain Pentagon competitions that it deemed too risky, opting not to bid on projects like the Air Force’s new “Doomsday” command plane to avoid another potential quagmire. In the meantime, Boeing is pouring resources into fixes and shoring up internal processes.
Company officials say they’re implementing “program management rigor” and working closely with suppliers to curb delays. Whether those changes can turn around the defense unit’s performance remains to be seen, but both Boeing and the Defense Department appear determined to not repeat recent history.
The cascading delays in Boeing’s defense programs have real consequences for U.S. defense capabilities. Each postponed delivery means the military must rely longer on older, legacy systems – sometimes at the expense of readiness.
Ironically, Boeing’s defense slump comes at a time when its commercial aviation business is striving to recover from historic crises. The company’s Airliner division spent 2019–2020 mired in the 737 MAX grounding and pandemic travel collapse, but has since rebounded with resurgent orders and deliveries. At the end of 2023, Boeing’s commercial backlog exceeded 5,000 airplanes (worth over $400 billion) amid booming demand from airlines.
Boeing is ramping up production of 737s and 787 Dreamliners and reporting positive margins on the commercial side. In stark contrast, Boeing’s defense unit has been posting losses and lagging its peers. Defense giants like Lockheed Martin and RTX (Raytheon) have seen revenues climb, buoyed by increased military spending and contracts to replenish munitions and systems (especially with the war in Ukraine driving demand).
Boeing, however, hasn’t benefited as much from the defense uptick because it is locked into a handful of legacy contracts that are losing money.
In 2022, Boeing Defense took a $4.4 billion charge, and 2023 brought another $1.7 billion in losses through Q3. By Boeing’s own admission, these were the worst results in the history of its defense business.
For now, Boeing’s civilian and defense businesses appear to be on opposite trajectories – one climbing out of a crisis, the other still in the thick of one. How quickly Boeing can steady its defense ship will determine whether the company as a whole can fully regain stability. Both Boeing executives and U.S. defense officials are hoping that 2025–2026 will bring a turning point, as the worst of the fixed-price development programs wind down and new, hopefully more balanced projects ramp up.
In the meantime, the Pentagon is applying lessons learned, Boeing is absorbing hard knocks, and America’s warfighters continue to await the delayed capabilities they were promised.
