Boeing CEO calls Trump’s Air Force One deal a risk he ‘probably shouldn’t have taken’

Boeing CEO Dave Calhoun says the company’s deal with Trump to build Air Force One was a risk the company “probably shouldn’t have taken.” The comment was made on Wednesday during a conference call to discuss the company Q1 results for 2022, showing that the Air Force One program has exceeded its expected budget by $660 million in recent months. In a financial file (PDF) Boeing reports that it has now lost $1.1 billion on the contract.

“What I’m just calling Air Force One is a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn’t have taken, but we are where we are and we’re going to deliver great aircraft.” And we will recognize the costs involved,” says Calhoun.

In 2018, Boeing reached an agreement with then-President Trump to design and build two new Air Force One aircraft at a fixed price of $3.9 billion. According to Acquisition.govis a fixed-price contract in which the contractor (Boeing in this case) is paid equally for a project, regardless of the costs — and potential losses — they incur.

The new agreement came after Trump threatened it (via tweet, of course). cancel the government’s previous Air Force One order as a cost-cutting measure in 2016. The original project was valued at $4-5 billion. The new agreement also pushed back the timeline for building the plane – Trump apparently wanted it to be ready by 2021 instead of 2024, according to CNN.

Boeing didn’t stick to that schedule, which isn’t very surprising. Since that deal was finalized, the company has been rocked by the 737 Max scandal (resulting in its CEO Dennis Muilenburg being fired and replaced by Calhoun), not to mention a global pandemic.

Calhoun said during Wednesday’s call that COVID-19 has been particularly tough on the company’s work on the new Air Force One. “In the defense world, if a COVID line goes down or a group of workers get off, we don’t have a whole bunch of cleared people to follow in their footsteps,” he said, noting the required “ultra-high” security clearances on the president’s plane work. “We were just beaten in different areas.”

He also noted that he does not want to enter into any additional fixed-price contracts and that he has a “very different philosophy” than the company’s previous CEO.

Calhoun says Boeing had a “messy quarter” in terms of government orders, largely because of the Air Force One project. “You will remember that it was a public hearing that took place some time ago. We took some risks, not knowing that COVID would hit and not knowing that an inflationary environment like the one we’ve seen before would prevail.”

Politically reported that Boeing now plans to deliver the first Air Force One in 2024 and the second aircraft the year after. CNBC on the other hand reports that it could be further delayed, and Boeing’s financial report says it could continue to lose money on the project.

CNBC’s history also includes a 2018 tweet from Boeing that’s what the project (now back over a billion in the hole) calls “outstanding value for taxpayers.” The tweet also says that “President Trump negotiated a good deal on behalf of the American people.” But here’s a question – if Boeing takes heavy losses on the project and writes them off on its taxes, is the general public really better for the supposed savings?

One final note: $2 billion per plane is still a staggering amount of money. You know how famous the F-35 is for being obscenely over budget, with the final price likely to be that high around $1.6 trillion? So far, Lockheed says About 800 of these planes have been made, which means that each one also currently costs around $2 billion, although that number will go down as more planes are made.

As my colleague Andrew Hawkins has pointed outHowever, Boeing’s Air Force One(s) will likely be very advanced, capable of missile dodge and surviving nuclear fallouts and EMPs – there is a cost to what he puts “the most resilient, high-tech, tricked no existing jumbo jet.” Boeing CEO calls Trump’s Air Force One deal a risk he ‘probably shouldn’t have taken’

Fry Electronics Team

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