Boeing [BA] on Wednesday reported lower losses in its first quarter amid signs of a recovery in commercial aerospace and the company’s defense business posted strong results, largely driven by the KC-46A aerial refueling aircraft for the Air Force.

“While the global pandemic continues to challenge the overall market environment, we view 2021 as a key inflection point for our industry as vaccine distribution accelerates and we work together across government and industry to help enable a robust recovery,” Boeing President and CEO Dave Calhoun said in a statement accompanying the earnings release.

During the company’s earnings call, Calhoun said a “full recovery is still likely a few years away” and is dependent on vaccine distribution and the lifting of travel restrictions in various domestic and regional markets. Greg Smith, Boeing’s outgoing chief financial officer, said on the call that Chinese regulators’ approval of the return to service in China of the 737 MAX passenger aircraft will also impact deliveries of the aircraft, which was grounded worldwide for more than a year following two fatal crashes in 2018 and 2019.

Sales fell 10 percent to $15.2 billion from $16.9 billion on lower revenue from the Commercial Airplanes segment and lower commercial revenue in the services segment. Defense sales were higher, primarily on KC-46A tanker orders.

The Defense, Space & Security segment increased sales 19 percent to $7.2 billion and turned in an operating profit of $405 million following a loss a year ago related to charges on the KC-46A program. Boeing, in a quarterly filing with the Securities and Exchange Commission, said 23 percent of defense sales were to international customers.

The defense segment generated $7 billion in orders, driven by KC-46, the P-8A Poseidon maritime patrol aircraft for the Navy and Royal Australian Air Force, and the V-22 Osprey tiltrotor for the Navy and Air Force. Defense backlog stood at $61.3 billion, up nearly a percent from $60.8 billion at the end of 2020, with international orders accounting for 31 percent of the total.

The net loss in the quarter was $561 million, 92 cents EPS, versus a $641 million ($1.11 EPS) loss a year ago when Boeing was still working on fixes to its troubled 737 MAX passenger plane. The loss in core earnings was $1.53 EPS, 55 cents per share worse than consensus estimates.

Boeing did disclose a $318 million pre-tax charge on the VC-25B program, which will replace the current Air Force One presidential transport aircraft, attributing the setback to COVID-19 impacts and “performance issues at a key supplier.”

Calhoun described the COVID impacts to the VC-25B as being “where employee clearance constraints impede our ability to exchange mechanics when quarantines are required.”

The supplier is GDC Technics, with whom Boeing canceled its contracts due to insolvency and missed contractual obligations. Boeing plans to move the work that was done by GDC Technics in house and or to new qualified suppliers and the company is working key small businesses that supported GDC Technics on the VC-25B.

For the VC-25B program, Boeing is modifying two 747-8 aircraft to include electrical power upgrades, a mission communication system, a medical facility, executive interior and autonomous ground operations capabilities. Boeing is working with the Air Force to update the program schedule.

Boeing hasn’t been providing financial guidance in two years due to uncertainties related to the 737 MAX crashes. Still, Smith said the company expects “revenue, earnings and operating cash to improve from 2020,” with deliveries of commercial aircraft driving the improvements and continued performance gains.

Free cash flow in the quarter was a $3.7 billion outflow, $1 billion better than a year ago. Total backlog stood at $363.9 billion, essentially level with the $363.4 billion at the end of 2020.