Boeing reveals $1.9 billion in losses on Air Force One contract
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Boeing revealed on Wednesday that its losses on its contract to build two new planes to act as Air Force One have hit $1.9 billion.
Then-President Donald Trump negotiated a fixed price of $3.9 billion for the presidential planes, leaving Boeing to foot the bill for anything over that amount.
‘We didn’t get enough price,’ Boeing Chief Executive Dave Calhoun told CNBC, adding the ‘biggest mistake’ on the Air Force One ‘was the fixed price nature’ of the contract.
He said the defense company would take a $766 million loss this year on the contract. Boeing previously booked about $1.1 billion in losses – bringing its total cost to $1.9 billion for constructing the planes.
The contract is also three years behind schedule.
The new Boeing 747-8s, which are being modified into flying White Houses, aren’t expected to fly until 2026 and 2027.
There needs to be two planes as there is always a backup for any presidential travel. The distinct blue-and-white Air Force Plane carries the call sign ‘Air Force One’ when the president is on board.
Boeing said the losses on the contract were ‘driven by higher costs to incorporate certain technical requirements, increases to factory modification labor and support engineering, schedule delays and higher supplier costs.’
Boeing revealed on Wednesday that its losses on its contract to build two new planes to act as Air Force One have hit $1.9 billion
Then-President Donald Trump negotiated a fixed price of $3.9 billion for the new presidential planes, leaving Boeing to foot the bill for anything over that amount – above Trump in the Oval Office with a model of the new Air Force One plane
Earlier this year, President Joe Biden scrapped Trump’s red, white and dark blue color scheme for the new Air Force One planes, citing the additional costs it would require.
The administration said changing the plane’s distinctive colors could drive up additional engineering, time and costs.
That means the Biden administration is keeping the light blue and white scheme that goes back to the Kennedy era.
The Air Force revealed earlier there’s a design flaw in Trump’s color plan: it called for the underside of the new 747s and its engine area to be painted dark blue.
But that could contribute to excessive temperatures on the plane, a problem that Boeing would have to pay out-of-pocket to fix.
Trump revealed his redesign in 2019.
The colors resembled the color scheme of Trump’s personal Boeing 757, which 2016 campaign crowds called ‘Trump Force One.’
Boeing CEO Dave Calhoun said in April that the company should have refused Trump’s terms for building the two new presidential planes.
The presidential plane contains classified communication gear to allow the president to be in constant communication with the outside world and features special items like a surgery suite.
It has a private office and conference room for the president’s use. If necessary, a president could run a nuclear war from his plane.
Unlike a normal 747, the plane has its own retractable stairways, for the rear entrance and the front entrance. And its own baggage loader so it can be entirely self servicable if it needs to be.
It also has an in-flight refueling system that gives it the ability to stay up in the air indefinitely.
Trump’s deal involved a fixed price of $3.9 billion, leaving Boeing to foot the bill for any design changes or ballooning costs.
‘Air Force One I’m just going to call a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably should not have taken,’ Calhoun said, ‘but we are where we are, and we’re going to deliver great airplanes.’
Air Force One on the ground in Florida in early October, the new presidential planes aren’t expected to fly until 2026 and 2027
President Joe Biden canceled Donald Trump’s plans to have the new Air Force One planes painted to match his personal Boeing 757, dubbed ‘Trump Force One’
Boeing CEO Dave Calhoun said in April that the company should have refused Trump’s terms for building the two new presidential planes
Trump took a close interest in plans for the new presidential airplane.
A model of the new design took pride of place in the Oval Office, on the coffee table by the fireplace where he often showed it off to guests.
The work on the two 747s is taking place in San Antonio, Texas.
The last Air Force One reboot came during John F. Kennedy’s presidency when industrial designer Raymond Loewy worked with first lady Jackie Kennedy on a sky blue and cyan motif.
That design stayed when the converted Boeing 747-200 planes that President Biden flies on were placed into service in 1990.
A rare color picture showing John and Jackie Kennedy in front of the Air Force One design which they oversaw. The photograph was taken when they landed in San Antonio, Texas, the day before JFK was assassinated. Air Force One at the time was a Boeing 707
‘Air Force One’ isn’t really a specific plane. It’s the radio call sign of any aircraft the President of the United States is aboard.
But the name has become shorthand of the specific jumbo jet that attracts attention and photographers wherever it lands.
Soon after taking office, Trump publicly criticized ‘out of control’ costs of Boeing’s then deal to build a new presidential plane.
‘Cancel order,’ he tweeted.
The result was that Dennis Muilenburg, then Boeing CEO, personally negotiated terms with the president at the White House and at Trump’s Florida resort of Mar-a-Lago.
Trump trumpeted the fixed-price agreement in 2018.
‘Boeing gave us a good deal,’ he said. ‘And we were able to take that.’
Boeing also spoke favorably about the deal at the time.
‘Boeing is proud to build the next generation of Air Force One, providing American presidents with a flying White House at outstanding value to taxpayers,’ the company tweeted.
‘President Trump negotiated a good deal on behalf of the American people.’
But last year Boeing sued a subcontractor that it blamed for delays.
In April, Boeing officials said the pandemic and supply-chain issues have also slowed the work.
The company said the new Air Force Ones will be based on its 747-8 series.
And Calhoun said he did not want any more fixed-price contracts.
Since the 1940s, seven different plane types have been specifically designed to carry the American president.