Boeing's KC-46 Pegasus aerial refueling tanker is a pretty plane -- and it just cost Boeing shareholders a pretty penny. Image source: Boeing.

There's an old saying that "no good deed goes unpunished." If that's correct, then perhaps Boeing (BA -1.90%) investors should feel relieved that their stock didn't get "punished" after beating earnings Wednesday morning.

But it sure as heck didn't get rewarded much, either.

The quarter that was
Reporting earnings in the wee early hours of Wednesday morning, Boeing handed investors some very good news: It beat earnings estimates with a stick. Specifically:

  • Q2 2015 sales of $24.5 billion exceeded analyst estimates by more than 1%, and were up 11% year over year.
  • Earnings of $1.59 per share surpassed the consensus by 16%, and Boeing's self-defined "core earnings" came in $0.03 higher at $1.62.
  • Meanwhile, operating cash flow surged 82% higher, falling just shy of an even $3.3 billion.

All of which seems to qualify as a "good deed" that Boeing's done for its shareholders.

The quarter that wasn't
Which is not to say it was all good news. If investors are rewarding the aerospace giant with less than 1% in market cap gains, there's at least some reason for their hesitancy. For example, if sales rose 11%, you might have expected earnings to climb higher in tandem.

They didn't.

Instead, operating profit margins dropped 120 basis points, "core" operating margins declined 200 basis points, and as a result, revenues in Q2 2015 weren't nearly as profitable for Boeing as revenues in Q2 2014 had been. In fact, net income at the company dropped 33% year over year, and earnings per share plunged 29%.

The reason there's no rally
So how did Boeing manage to fumble what should have been an unabashedly great quarter? You heard it here first: Four years ago, Boeing bid too low on the Air Force's KC-X aerial refueling tanker contract -- and now it's paying the price.

Way back in 2011, Boeing secured the contract to build the aircraft now known as the KC-46 Pegasus tanker by underbidding rival Airbus by 10%, and offering to build the first 179 U.S. Air Force planes for just $31.5 billion.

The company denounced Boeing's bid as "much lower than we would have gone," but bowed out of the competition anyway, handing the contract to Boeing. Boeing, for its part, then began preparing investors for the bad news, warning that KC-46's "development phase... would be a very low profitability or breakeven," taking a $272 million after-tax charge to earnings on the project last year, and now a further $536 million after-tax charge this week.

What's next for investors
Tallying up all charges taken so far by Boeing on the KC-46 since winning the contract, the Los Angeles Times said the aircraft has already cost Boeing $1.26 billion in lost profits. If you take Airbus' parting shot at face value, though, and assume Boeing needed to bid, say, $34.6 billion or so back in 2011, in order to have a chance at earning a profit on this plane, then we could be as little as 40% of the way through the writedowns.

Long story short: Don't assume "$536 million" is the extent of the damage from Boeing's "winning" the KC-46 contract. The fallout from this "good" news could continue raining down for years to come.