Trump’s Air Force One Contract Cost Boeing $1.1 Billion; CEO Regrets Deal.
• Boeing has already lost $1.1 billion due to costs connected with modifying two 747 jumbo jets to serve as Air Force One.
• Boeing CEO Dave Calhoun said the plane contract, which was negotiated with then-President Donald Trump in 2018, “probably shouldn’t have taken” risks.
• Boeing announced a $1.2 billion net loss in the first quarter of 2022, including a $660 million charge for delays and higher costs linked with the Air Force One program.
• Boeing‘s deal for Air Force One, which was cut by then-CEO Dennis Muilenburg, compels the business to bear the cost of any contract overruns, not the federal government.
Boeing revealed on Wednesday that it has lost $1.1 billion in costs as a result of its arrangement with the Trump administration to upgrade two 747 jumbo jets to serve as Air Force One — and CEO Dave Calhoun conceded that the company “probably” should not have cut the deal in the first place.
Boeing cautioned in a regulatory filing that further losses on the Air Force One contract could be expected in the coming quarters. The official designation for any jet carrying the president of the United States is Air Force One.
On a conference call with analysts, Calhoun described Air Force One as “a very unusual moment, a very unique negotiation, a very unique set of risks that Boeing arguably shouldn’t have accepted.”
“But We’re Where We Are, And We’re Going To Deliver Terrific Aeroplanes,” Calhoun Said Shortly After Boeing Announced The First-Quarter Loss In 2022.
“And we’ll account for the costs that come with it,” Boeing reported a $1.2 billion first-quarter net loss on Wednesday, including a $660 million charge for delays and higher costs linked with the Air Force One program.
The first-quarter charge on the Air Force One program raises the overall loss associated with it to more than $1.1 billion, according to the business.
In a securities filing, Boeing stated, “Risk remains that we may be obliged to declare more losses in future quarters.” Boeing’s deal for the Air Force One planes was signed in February 2018 by then-CEO Dennis Muilenburg and then-President Donald Trump.
It mandates that any cost overruns in the modification of the two Boeing 747 jets be borne by Boeing, not the federal government. Boeing will be paid almost $4 billion for the work under the fixed-price deal.
The first of the two planes was supposed to arrive in 2024, but according to an Air Force budget request released earlier this month, that won’t happen until 2026.
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