Seattle, January 28 - Boeing has reported a $565 million charge on its KC-46 Pegasus aerial refueling tanker program in the fourth quarter of 2025, marking a significant financial setback for the long-troubled defense initiative. This latest loss stems primarily from elevated production support requirements, ongoing engineering and quality efforts at the Everett facility, and rising estimated supply chain costs. The KC-46 Pegasus, derived from the Boeing 767 airframe, continues to face persistent challenges despite incremental operational improvements. The U.S. Air Force relies on the tanker to modernize its aging fleet, replacing the venerable KC-135 Stratotanker with enhanced capabilities for global refueling missions.
The charge contributes to Boeing's cumulative losses on the KC-46 program, which now exceed $8 billion since the fixed-price contract began over a decade ago. Company executives have described the existing agreement as unfavorable, highlighting how unforeseen cost escalations in manufacturing and supplier performance have eroded profitability. Despite these pressures, Boeing noted positive trends in the program's execution, including a 20% reduction in factory rework during the latter half of 2025 due to intensified quality investments. These efforts aim to stabilize production and support reliable deliveries to the Air Force and international partners.
Looking ahead, Boeing is positioning itself for a critical repricing opportunity as the baseline production contract nears completion in 2026. Negotiations for follow-on batches, including potential extensions to procure additional KC-46 aircraft beyond the current program of record, are expected to commence later in the year. Leadership has emphasized a rigorous approach to establishing an accurate cost baseline for future contracts, ensuring more equitable terms that reflect actual production realities. This strategic shift is intended to prevent repetition of past financial strains while capitalizing on the Air Force's commitment to sustained Pegasus acquisitions.
The KC-46 Pegasus remains a cornerstone of U.S. military air mobility, with Boeing delivering aircraft amid ongoing enhancements to mission systems. Recent orders, such as for 15 additional tankers, underscore continued demand within Boeing's defense portfolio. As the company advances toward repricing discussions, focus on cost discipline and performance reliability will be essential to restoring profitability on this vital aerial refueling platform.