Trefis Team
4 min read
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Boeing (BA) stock fell 26.4% from August 7 to November 5, 2026, while the S&P 500 lost 5.0%. The price appears to want a steadier 737 factory, and management said on October 27 that it does not expect steady output at 47 jets a month until 2027. Yet management credited third-quarter sales growth mainly to defense and services, not jetliners. That is the mismatch, though defense helps only if it keeps growing at a real profit. So how fast is Boeing’s defense business growing?
Boeing’s Defense Sales Grew 15% In The Third Quarter
Defense revenue rose 15% to $7.9 billion in the third quarter of 2026, while Boeing’s jetliner sales shrank. Over the same quarter, revenue from its jetliners fell 3% to $10.7 billion. Management attributed that decline to a less favorable mix of deliveries. That makes defense about a third of Boeing’s $24.2 billion in quarterly sales.
Management credited the defense rise mainly to higher volume, including classified missile and weapons programs. It said about 2 points of the increase came from Spirit, which contributed about $150 million of the unit’s sales in the quarter. Orders are running well ahead of sales. The defense unit booked $23 billion of orders in the quarter, and management put its backlog at a record $101 billion. That backlog does not yet include the US Navy’s next fighter jet, which the Navy selected Boeing to design, build and deliver.
Management also expects more defense growth than it did a year ago, forecasting revenue growth in the middle single digits or higher going forward, compared with the low single digits it was thinking of then. That is still slower than the third quarter’s 15%, about 2 points of which came from Spirit.
Does Boeing’s Defense Business Earn Enough Yet?
Not yet. On management’s own measure, the defense unit’s operating margin was 6.2% in the third quarter, and that figure includes a $252 million gain on the sale of HRL Laboratories. That gain accounted for about half the unit’s operating profit; without it, the margin would have been about 3%. Management said it remains confident of reaching high single-digit margins, so the profit is still catching up with the sales.
That matters because the jetliners are where Boeing loses money. On the same measure, the jetliner unit’s operating margin was negative 6.5%. Management also expects 737 deliveries for 2026 to come in shy of its 500 target, because the factory is taking longer to steady.
