This financial setback is primarily attributed to higher estimated manufacturing costs related to engineering changes, labor instability, and the resolution of supplier negotiations, as stated by Boeing Chief Financial Officer Brian West during the company's third-quarter earnings call.

The VC-25B program, aimed at delivering two new Air Force One jets, has been plagued by various challenges, including a shortage of workers and parts. As a result, the delivery of the first jet has been delayed until 2027. As of now, Boeing has already suffered losses amounting to over $2.4 billion on the program, according to a company spokesperson. In retrospect, CEO Dave Calhoun hinted that agreeing to the fixed $3.9 billion price tag was a mistake.

Addressing the financial impact on the end product during the earnings call on Wednesday, Calhoun reassured stakeholders that the increased estimates would not compromise the performance and capability of the presidential plane. He explained that the elevated costs primarily reflect the complex process of building the aircraft and how unplanned hurdles in a fixed pricing environment could lead to unrecoverable expenses.

The VC-25B program's setbacks have dealt a significant blow to Boeing's defense business, resulting in a total loss of $924 million in the third quarter. Furthermore, the company incurred a loss of $315 million on an undisclosed satellite program, which was reportedly tied to customer considerations and the higher estimated cost of delivering a highly innovative satellite constellation contract signed several years ago.

Despite the disappointing financial performance, Boeing remains committed to restoring its defense business. Brian West outlined several steps to improve performance, including implementing "lean" initiatives, enhancing contracting disciplines, and making factory improvements. West emphasized the importance of moving away from legacy contracts and not signing any fixed-price development contracts moving forward.

Another persistent challenge for Boeing is the KC-46 tanker program, which has already accumulated losses exceeding $7 billion. The possibility of additional program deficiencies further contributing to the losses remains a concern. However, there is some positive news for Boeing as the Air Force considers purchasing 75 more KC-46 tankers from the company to serve as a bridge until the arrival of the next-generation aerial refuer, known as NGAS.

In a recent development, Lockheed Martin, in partnership with Airbus, had planned to compete in the next tanker competition with the LMXT, a modified version of Airbus' A330-based tanker. However, Lockheed Martin has now withdrawn from the competition, leaving Airbus as the sole competitor for the upcoming tranche of tankers.

Boeing's CEO, Dave Calhoun, expressed his view on Lockheed's withdrawal, stating that he liked what it ultimately meant for Boeing and the competition. He also confirmed that Boeing would remain disciplined when it comes to underwriting costs and ensuring the success of the next tanker contract. Calhoun acknowledged that the next contract carries great significance for Boeing's future endeavors.

Despite the challenges, Boeing managed to achieve some positive milestones this quarter. Notably, they successfully delivered the first T-7A Red Hawk trainer aircraft to the Air Force and secured an Army contract to build 21 AH-64E Apache helicopters.

Boeing remains determined to steer its defense business back on track in the coming years, implementing strategic initiatives to enhance performance and address the financial setbacks incurred on significant programs like Air Force One and the KC-46 tanker.