Starliner Now Costing Boeing Almost $900 Million

Boeing acknowledged today that it is taking a further $195 million charge against earnings for the CST-100 Starliner commercial crew program. Developed through a fixed-price contract with NASA, Starliner has encoutered a number of delays and Boeing must cover those costs. Added to $688 million already taken, the company now is spending $883 million of its own money on the program.

In a third quarter 2022 financial earnings conference call today, Boeing Chief Financial Officer Brian West briefly referred to losses the company incurred from fixed-price development programs with the government. The $2.8 billion in losses in Defense, Space & Security programs was accountable primarily to two aircraft, KC-46A ($1.2 billion) and VC-25B ($766 million). Commercial crew was one of three programs comprising the remainder.

He did not specify the amounts for those other programs in his remarks, but the company’s 10-Q filing with the Security and Exchange Commission reveals it was $195 million for commercial crew.

“During the nine and three months that ended September 30, 2022, we increased the reach-forward loss by $288 [million] and $195 [million] primarily reflecting increases to estimated costs related to completing the crewed flight tests and revised schedules for both the crewed flight test and three post certification missions.”

The $288 million reflects $185 million in the third quarter of 2021 plus $93 million in the second quarter of 2022. That’s on top of $410 million in the fourth quarter of 2019. All in all, $883 million.

Starliner is being procured through a Public-Private Partnership where the government and the private sector share development costs and the government guarantees purchase of a certain amount of services. The company retains ownership of the system and is expected to find other customers to close the business case.

NASA awarded two commercial crew contracts in 2014: $4.2 billion to Boeing and $2.6 billion to SpaceX. The price covered development activities and test flights, six operational crewed flights to the International Space Station, and special studies according to NASA’s Office of Inspector General.

SpaceX’s Crew Dragon completed its test flights in 2020 and the system is now operational, launching crews both for NASA and private astronauts. Earlier this month it launched its sixth crewed mission for NASA, Crew-5. In addition, two private astronaut missions (Inspiration4 and Axiom-1) on Crew Dragon launched in 2021 and 2022, a total of eight crewed launches in two years.

By contrast, Boeing’s Starliner has suffered a series of delays and only completed its first test flight, without a crew, in May. The first attempt at an uncrewed test flight, Orbital Flight Test (OFT) in December 2019, encountered significant technical problems and Boeing decided to refly it before putting people onboard. In August 2021, a year-and-a-half later, it was ready to try again with Orbital Flight Test-2 (OFT-2), but the launch was scrubbed just hours before liftoff when 13 propulsion valves would not open. It was another nine months before OFT-2 finally flew.

Boeing still must conduct a Crew Flight Test (CFT) with two NASA astronauts, Butch Wilmore and Suni Williams. NASA and Boeing currently plan that for no earlier than February 2023. Assuming it meets NASA’s certification requirements, Starliner could fly the first of the six operational or “Post-Certification Missions” by the end of 2023.

In the 10-Q filing, Boeing said the “increase recorded in the third quarter of 2022 was primarily driven by timing of the three future post certification missions which are now assumed to be completed by 2026 based on NASA’s revised launch plans. We had previously assumed that the post certification missions would be completed by 2024. Risk remains that we may record additional losses in future periods.”

ISS crews rotate on roughly 6-month schedules and NASA’s original plan was to alternate launches of Crew Dragon and Starliner, with one per year for each company. With services beginning in 2020, that could have meant 10 each, since ISS is intended to operate through 2030. Because of the delay in Starliner’s availability, however, NASA purchased more Crew Dragons, recently signing an agreement that brings the total to 14 through 2030.

Coupled with the six NASA already bought from Boeing, all of NASA’s ISS crew transportation needs seem to be met. Other markets include private astronaut flights and servicing commercial space stations NASA hopes will be in place by the time ISS is retired. NASA is working with several companies through the Commercial LEO Destinations effort to design such stations. Boeing is part of the Orbital Reef team led by Blue Origin. Boeing operates the ISS for NASA.