Boeing Company (BA.US) Q3 Revenue Beats Expectations; Widening Losses in Commercial Aircraft Business Weigh on Profitability; Cash Flow Performance Becomes the Biggest Surprise

Boeing Company (BA.US) reported its Q3 2026 results before the U.S. market opened on Tuesday. The report showed that Boeing Company's Q3 sales rose 4% year-over-year to $24.188 billion, beating the analyst consensus of $23.840 billion. GAAP net loss was $116 million, sharply narrower than the $5.339 billion in the same period last year (last year's period included a $4.9 billion pre-tax charge on the 777X program). GAAP loss per share was $0.26; Non-GAAP loss per share was $0.34, missing the analyst consensus of a $0.21 loss per share. The company's backlog reached a record $745 billion, including more than 6,300 commercial aircraft. Cash flow became the biggest highlight of the quarter. Operating cash flow for the quarter was $1.496 billion, up 33% year-over-year; free cash flow was $464 million, above the market expectation of about $325 millionand the quarter's cash flow already included about $700 million in settlement payments to the U.S. Department of Justice. The company's net debt fell to $25.2 billion, declining for the second consecutive quarter. Performance diverged across business segments. The commercial aircraft segment posted revenue of $10.7 billion, slightly lower year-over-year; operating loss was $697 million, missing the analyst consensus of a $360.8 million loss. The margin was negative 6.5%. The company attributed this to a lower-margin delivery mix and rising supply chain costs. The defense and space segment posted profit of about $500 million, with margin rising to 6.2% from 1.7% in the same period last year, partly helped by the sale of a research laboratory that Boeing Company co-owned for more than 20 years, while surging global defense spending also drove increased business volume in the segment. The global services segment posted profit of $1 billion, with an 18.3% margin, continuing to serve as the profit pillar. The starkly different performance of Boeing Company's commercial aircraft and defense businesses highlights the complex challenges facing CEO Kelly Ortberg and his team as they turn around this American Airlines Group Inc. aerospace giant. Over the past decade, a series of quality and safety crises, including multiple fatal crashes, have dealt a heavy blow to Boeing Company's financial condition. Boeing Company reiterated that it plans to begin deliveries of the 777-9 widebody passenger jet next year, meaning the program will be about six years later than originally planned. At the same time, the company will also increase production of its "cash cow" 737 Max single-aisle passenger jet, and is still working to stabilize 737 Max output at 47 aircraft per month. In a letter to employees on Tuesday, Ortberg said: "Looking ahead, expectations are rising, and rightly so. We have a stronger foundation than we did a year ago, but we have more work to do, including delivering on our backlog, strengthening our culture, and improving how we work every day." The CEO has already sold a number of non-core assets, divesting HRL Laboratories this quarter. Since then, Wall Street's attitude toward the aircraft manufacturer has become more optimistic, although supply chain and production problems are still weighing on its plans to raise output, especially engine delivery issues that are limiting production increases for the 737 Max and 787 Dreamliner. Ortberg said in September that Boeing Company had not yet achieved the "engine delivery performance" needed to produce 10 787 aircraft per month, with the current production rate at 8 per month.