NEW YORK: Aerospace giant Boeing reported a surprise $3.3 billion third-quarter loss Wednesday as it struggled with swelling costs on several defence programs, including the US presidential jet Air Force One.

The performance woes in defence — which also affected the KC-46 refueling and military transport aircraft and the T-7A Air Force pilot training system — reflects the drag from supply chain problems that have plagued the broader economy, as well as the restrictive nature of the contracts.

Locking Boeing into a fixed-price contract was unwise, Chief Executive Dave Calhoun acknowledged in an interview with CNBC that touched on the company’s troubled execution of an Air Force One procurement revamp negotiated with former president Donald Trump.

“It turns out the critics were right. So we didn’t get enough price, that’s fairly obvious to all of us,” Calhoun said.

“The biggest, probably, mistake on... Air Force One was the fixed price nature of it,” he said. “When a program that requires that many agencies and that many things to come to bear on a particular platform, and there’s only two of them, that just begs for more of a cost-incentive kind of contract.”

Boeing also said costs were rising in other unspecified defence projects.

The difficulties in Boeing’s defence program came as the company saw a jump in revenues in its commercial airplane division following the resumption of deliveries of the 787 Dreamliner and an increase in deliveries in the 737 MAX. The aviation giant reported a four-percent rise in revenues to $16 billion, which also missed analyst estimates.

On the up side, Boeing reaffirmed it is on track for positive free cash flow in 2022, a statement that temporarily boosted shares. The company also described demand for commercial planes as robust in spite of worries about the broader global economy.

Separately, Boeing announced that Alaska Airlines had exercised options for an additional 52 737 MAX planes.