(In paragraph 12, corrects spelling of Ortberg)

By Mike Stone

WASHINGTON, Oct 23 (Reuters) - Boeing ( BA ) CEO Kelly Ortberg

anticipates the planemaker's defense business will continue to

struggle under the weight of budget-busting older contracts, but

he said on Wednesday that despite many problems the unit making

helicopters, fighter jets and missiles remains "core" to the

company's future.

Cost overruns at the KC-46 midair refueling tanker program

have surpassed $7 billion in recent years, while another

fixed-price contract to upgrade two Air Force One planes has

created a $2 billion loss for the top 5 U.S. defense contractor.

Boeing ( BA ) shares dropped 1.76% on Wednesday after the

planemaker reported a quarterly loss of $6 billion, pressured by

a five-week strike and problems in airplane manufacturing.

The Boeing Defense, Space & Security unit needs to replace a

CEO who left last month. It has also been hobbled by expensive

mistakes at its space unit.

Boeing's ( BA ) Starliner spacecraft has been hindered for years by

development delays and technical problems with over $1.8 billion

in private cost overruns. Two NASA astronauts that the company

brought to the International Space Stations remain stuck there,

scheduled to return in February on a craft from rival SpaceX.

Boeing ( BA ) has struggled to provide a second ride.

Boeing ( BA ) also faces pressure to cut costs in its multibillion

dollar SLS rocket contract with NASA, which is billions over

budget and years behind schedule.

Ortberg, responding to questions about divestitures in its

defense business, called it "core" on Wednesday's earnings call

with Wall Street analysts, but noted the company wants to do a

better job at fewer things.

"Clearly our core of commercial airplanes and defense

systems are going to stay with the Boeing ( BA ) company for the long

run," Ortberg said.

As the cash-strapped company has battled multiple crises,

including a strike and the prolonged grounding of its 737 MAX

aircraft, better management and more discipline was needed,

Ortberg said.

The company would get better at estimating costs and

possibly exit ongoing competitions for new defense contracts in

order to find a more profitable path forward, he said.

In the just-reported third quarter alone, cost overruns on

several fixed price Air Force contracts including the new Air

Force One and training fighter jets created a $2 billion loss

for the unit.

"Even if we wanted to, I don't think we can walk away from

these contracts," Ortberg told Wall Street analysts on a post

earnings conference call.

The big defense contractor is already in talks to sell its

rocket-launching joint venture with Lockheed Martin ( LMT ),

United Launch Alliance. Insitu, a drone business, has also been

slated for divestiture, but Boeing ( BA ) has not formally launched the

sale process, two people familiar with the situation said.

A Boeing ( BA ) spokeperson declined to comment on the

divestitures.

Boeing ( BA ) recently sold its Digital Reciever Technology (DTS)

business to France's Thales SA for about $100 million.

But two sources told Reuters the executive suite is too busy

and understaffed to speed up ongoing divestitures at its space

and defense unit, or to prepare data on other units for possible

sale despite desperately needing the cash.

The CEO of Boeing Defense Ted Colbert left the company last

month.

Ortberg himself said, "we are somewhat consumed with the

challenges of today." He gave himself until year end to get his

arms around the company.

Boeing's ( BA ) Boeing Defense, Space & Security unit encompasses a

wide range of products and services, including military

aircraft, drones, satellites, weapons systems, missile defense,

and space exploration. Some of the key components of the BDS

business include the F-15 and F/A-18 fighter jets, Apache and

Chinook helicopters, the KC-46 tanker, and various space and

satellite systems.