NASA’s decision not to use Boeing capsule to bring back astronauts has added to the company’s troubles

The space capsule program is a small part of Boeing’s revenue, but carrying astronauts is a high-profile job – like Boeing’s job building the Air Force One presidential jet. File | Photo credit: AP

NASA’s announcement Saturday (Aug. 24, 2024) that it will not use the troubled Boeing capsule to return two stranded astronauts to Earth is another blow to the struggling company, though the financial damage is likely to be less than the damage to reputation.

Boeing’s reputation, considered a beacon of American engineering and technological prowess, has suffered a setback since two 737 Max planes crashed in 2018 and 2019, killing 346 people. Questions were raised anew about the safety of its products after a Max panel exploded during flight this January.

And now NASA has decided it is safer to keep the astronauts in space until February rather than risk using the Boeing Starliner capsule that carried them to the International Space Station. The capsule has been plagued by problems with its propulsion system.

NASA Administrator Bill Nelson said the decision to send the Boeing capsule back to Earth empty was “a result of our commitment to safety.” Boeing had insisted the Starliner was safe based on recent tests of the thrusters in space and on the ground.

The space capsule program is a small part of Boeing’s revenue, but carrying astronauts is a high-profile operation — like Boeing’s work building the Air Force One presidential jet.

“This whole matter is another black eye for Boeing,” said aerospace analyst Richard Aboulafia. “It’s going to sting for a little while, but it’s nothing they haven’t dealt with before.”

Boeing has lost more than $25 billion since 2018 as its plane-manufacturing business collapsed after those crashes. For a while, the company’s defense and space side provided partial support, delivering strong profits and steady revenue through 2021.

Read this also | Why NASA astronauts Butch Wilmore and Sunita Williams could stay in space until 2025?

However, since 2022, Boeing’s defense and space division has also faltered, posting a loss of $6 billion — slightly more than the company’s airplane division over the same period.

The results were dragged down by several fixed-price contracts for NASA and the Pentagon, including a deal to build the new Air Force One presidential jet. Boeing finds itself in a quandary as the cost of those projects has risen far beyond the company’s estimates.

The company lost $1 billion on fixed-price government contracts in the second quarter alone, but this problem isn’t new.

“We have certain fixed-price development programs that we have to complete and never have to do again,” then-CEO David Calhoun said last year.

In 2014, NASA awarded a $4.2 billion, fixed-price contract to Boeing to build vehicles to carry astronauts to the International Space Station after the space shuttles are retired, as well as a $2.6 billion contract to SpaceX.

Boeing, which has been building airplanes for more than a century and working as a NASA contractor for decades, was considered the favorite. But Starliner suffered technical setbacks that forced it to cancel some test launches, fell behind schedule and cost more than budget. SpaceX won the race to ferry astronauts to the ISS, which it accomplished in 2020.

Boeing finally agreed to carry astronauts this year, and Butch Wilmore and Suni Williams took off on the Starliner in early June, aiming for an 8-day stay in space. But thruster failures and a helium leak forced NASA to park the spacecraft at the space station while engineers debated how to get them back to Earth.

The company said in a regulatory filing that the latest hitch with Starliner caused a $125 million loss through June 30, increasing cumulative costs on the program to more than $1.5 billion. “The risk remains that we may record additional losses in future periods,” Boeing said.

Mr. Aboulafia said Starliner’s impact on Boeing’s business and finances would be modest — “there really won’t be a big change.” Even NASA’s $4.2 billion multi-year contract is a relatively small part of revenue for Boeing, which reported sales of $78 billion last year.

And Mr. Aboulafia believes Boeing will enjoy a grace period with customers such as the government now that it is under new leadership, reducing the risk of losing big contracts. NASA Administrator Nelson said on Saturday that he is “100%” confident that Starliner will fly with crew again.

Robert “Kelly” Ortberg took over as CEO this month, replacing Calhoun. Unlike the company’s recent chief executives, Ortberg is an outsider who previously led aerospace manufacturer Rockwell Collins, where he built a reputation for hanging out among workers on the factory floor and building relationships with airline and government customers.

“They’re moving from probably the worst executive leadership to some of the best,” Mr. Aboulafia said. “With the regime change happening, I think people will give them some leeway.”

Boeing’s defense division has won some big contracts recently. It is set to provide Apache helicopters to foreign governments, sell 50 F-15 fighter jets to Israel under a $20 billion deal, and build prototype surveillance aircraft for the Air Force under a $2.56 billion contract.

“These are some strong tailwinds, but it will take some time to make (Boeing’s defense and space businesses) profitable again,” Mr. Aboulafia said.