How Boeing Makes Money

Boeing, one of the world's leading aerospace companies, develops and manufactures commercial jets, military aircraft, weapons systems, and strategic defense and intelligence systems. The company offers services and support to customers globally and provides financing for orders and deliveries. The U.S. government is a significant buyer of Boeing's products.

One of Boeing's (BA) biggest rivals, especially for commercial aircraft, is the Europe-based aerospace firm Airbus SE (EADSY). Boeing also has aerospace rivals based in Russia, China, and Japan. Additionally, the company's defense and space business faces competition from major players like Lockheed Martin Corp. (LMT), Northrop Grumman Corp. (NOC), Raytheon Co. (RTX), General Dynamics Corp. (GD), U.K.-based BAE Systems PLC (BAESY), and Elon Musk's SpaceX.

Boeing's Financials

In January 2024, Boeing announced its financial results for the 2023 fiscal year (FY) ending Dec. 31, 2023. The company reported a net loss attributable to its shareholders of $2.2 billion, an improvement from the net loss of $4.94 billion in 2022. Revenue increased by 16.79% year over year (YOY) to $77.79 billion.

Boeing uses earnings from operations as a profitability metric for its business segments. For the year ending 2023, the company reported a $773 loss from operations, smaller than the $3.5 billion loss from operations reported in 2022.

The company is still suffering from the fallout of the many issues that have occurred with its 737 and 787 planes, which resulted in the company stopping production of those planes for brief periods; however, the planes are still being produced and delivered.

Boeing’s Business Segments

Boeing operates its business through three segments: Commercial Airplanes (BCA); Defense, Space & Security (BDS); and Global Services (BGS). The company provides a breakdown of revenue and earnings from operations for each of these segments.

The only sector that contributed to the company's operating profit was its Global Services segment. The segment generated an operating profit of $3.33 billion. All other segments generated an operating loss, which resulted in a total operating loss of $773 million.

Commercial Airplanes (BCA)

Boeing's Commercial Airplane segment develops, produces, and markets commercial jet aircraft and provides fleet support services, primarily for the global airline industry. The segment supplies jetliners to meet global airlines' varying requirements for transporting passengers and cargo.

For the FY ending 2023, the segment's loss from operations narrowed to $1.64 billion from $2.34 billion in the previous year. Revenue rose 30.26% YOY to $33.90 billion, comprising about 43.58% of Boeing's total revenue.

Defense, Space & Security (BDS)

Boeing's BDS segment researches, develops, produces, and modifies military aircraft and weapons systems for strike, surveillance, and mobility. The segment also researches, develops, produces, and modifies strategic defense and intelligence systems, as well as satellite systems. The segment's top customer is the U.S. Department of Defense.

The BDS segment reported a loss from operations of $1.76 billion for 2023, an improvement from the $3.54 billion operating loss in 2023. Revenue grew by 7.65% YOY to $24.93 billion, comprising 32.05% of the total for all segments.

Global Services (BGS)

Boeing's Global Services segment offers services to its commercial and defense customers around the globe. The segment provides a wide range of platforms, systems, products, and services. These include supply chain and logistics management, engineering, maintenance and modifications, upgrades and conversions, spare parts, pilot and maintenance training systems and services, data analytics, and digital services.

Earnings from operations were $3.33 billion in 2023, up 22.08% YOY. It accounted for 100% of companywide earnings from operations during the year. Revenue rose 8.61% YOY to $19.13 billion, comprising nearly 24.59% of the total for all segments.

Boeing’s Recent Developments

In March 2024, it was announced that Boeing President and CEO, David Calhoun, will step down as CEO at the end of 2024. A replacement has not yet been announced. Additionally, Stan Deal, Boeing's Commercial Airplanes President and CEO will retire from the company.

The U.S. Space Force has awarded Boeing a contract to produce the WGS-12 communications satellite. The contract is valued at $439.6 million. This is the 12th Wideband Global SATCOM (WGS) satellite for the U.S. Space Force.

The Bottom Line

Boeing is one of the largest and most prominent defense and commercial airline production companies in the world. While its Commercial Airplane business generates the bulk of its revenue, it has suffered due to the serious mechanical issues of some of its models. Its Global Services business is its largest contributor to operating profit; however, not enough to outweigh the losses of its other segments.