Boeing revealed on Wednesday that it had lost a whopping $ 1.1 billion in its deal with the Trump administration to modify two 747 jumbo planes to serve as Air Force One – and CEO Dave Calhoun admitted the aviation giant “probably” shouldn’t have cut the deal in the first place.
Even more losses under the Air Force One contract could come in the coming quarters, Boeing warned in a regulatory dossier.
Air Force One is the official designation for each aircraft carrying the President of the United States.
“I will simply call Air Force One a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably should not have taken,” Calhoun said during a conversation with analysts.
“But we are where we are, and we will deliver great planes,” said Calhoun, shortly after Boeing reported a loss for the first quarter of 2022.
“And we will recognize the costs involved.”
Boeing on Wednesday revealed a net loss of $ 1.2 billion in the first quarter with a $ 660 million fee due to delays and higher costs for the Air Force One program.
US President Donald Trump arrives on a day trip to Georgia aboard Air Force One at the Andrews Joint Base, Maryland, USA, July 15, 2020.
Jonathan Ernst Reuters
The company said the fee for the first quarter of the Air Force One program brought the total loss associated with it to more than $ 1.1 billion.
“There remains a risk that we may have to record additional losses in future periods,” Boeing said in the securities documentation.
Boeing’s Air Force One deal was terminated by then-CEO Dennis Mullenburg and then-President Donald Trump in February 2018.
This requires Boeing, not the federal government, to bear the cost of possibly exceeding the cost of modifying the two Boeing 747s.
Under this fixed-price contract, Boeing is paid about $ 4 billion for the work.
CNBC Policy
Read more of CNBC’s political coverage:
In 2018, Trump boasted that “Boeing gave us a good deal. And we managed to accept that. “
Four years ago, Boeing spoke positively about the move.
“Boeing is proud to create the next generation Air Force One, giving American presidents a flying White House of exceptional value to taxpayers,” President Trump wrote on Twitter in February 2018. “President Trump has struck a good deal on behalf of the American people.”
Trump also told CBS News that the planes would get rid of Air Force One’s traditional baby blue color scheme in favor of “red, white and blue, which I think is appropriate.”
“Air Force One will be amazing,” Trump said at the time. This will be at the top of the line, at the top of the world.
A month after he was elected president in November 2016, Trump complained on Twitter about the cost of “out of control” the then Boeing deal to build a new Air Force One.
“Cancel the order!” Trump tweeted then.
He later boasted that his talks with Mulenburg had saved $ 1.5 billion for taxpayers.
Boeing fired Mullenburg as CEO in December 2019 for dealing with two crashes on the company’s 737 Max planes that killed 346 people.
He was denied compensation but received $ 60 million in pension benefits and shares in the company, Boeing said a month after he was ousted.
Add Comment