Weeks before taking office as President of the United States, Donald Trump has slammed plane-maker Boeing for its role in the US Air Force’s bid to field a new Air Force One.
In a subsequent tweet, Trump suggested that the deal to provide a new presidential transport for the USAF will cost more than $4 billion. In response, Boeing stated that its current contract with the Air Force is worth $170 million.
Nevertheless, Trump’s words led to a dramatic, if brief, dip in Boeing’s stock: company shares dropped just under 1 per cent minutes after the tweet — falling from $152.16 to $149.75 per share.
While Trump called for the Air Force One order to be cancelled, Boeing responded with a statement outlining the status of the deal: ‘We are currently under contract for $170m to help determine the capabilities of these complex military aircraft that serves the unique requirements of the President of the United States.’
The statement continued: ‘We look forward to working with the US Air Force on subsequent phases of the program to deliver the best planes for the president at the best value for the American taxpayer.’
Industry observers were quick to point out that the projected costs of the new Air Force One are in line with expectations, and that there have been no cost overruns since Boeing won the contact in January 2016 to start working on a new fleet of government aircraft based on its 747-800 commercial airliner.
Press Secretary Josh Earnest told reporters that Trump’s remarks ‘do not appear to reflect arrangements’ made between Boeing and the USAF. As currently budgeted, the Air Force One replacement program is expected to cost $2.87 billion during the Fiscal Years 2015 to 2021.
Currently, no production contract has been awarded to Boeing for work on the Air Force One replacement program.
In January 2015 the USAF announced plans to procure a variant of the Boeing 747-800 series airliner as a replacement for the current pair of VC-25As. Although the VC-25As, which are based on the earlier 747-200B series, will reportedly reach the end of their 30-year service life in 2017, the replacement will not enter service until 2024. At the time it was reported that the USAF had set aside $1.65 billion between 2015 and 2019 for two replacement jumbo jets.
In January 2016 Boeing received a $25.8-million contract from the Air Force Life Cycle Management Center that allowed it to begin work on the Presidential Aircraft Recapitalization Program. The so-called Phase I Pre-Milestone B activities include the definition of detailed requirements and design trade-offs that will reduce risks during engineering and manufacturing development (EMD) and result in lower life-cycle costs. The initial effort will run through April 2017.
On May 10, 2016 the Air Force Life Cycle Management Center announced that it would award a sole-source contract modification for preliminary design activities for the Presidential Aircraft Recapitalization program to Boeing. These latest efforts were focused on just two aircraft that will be procured separately. The USAF included $351 million in its Fiscal Year 2017 budget request to begin designing and building the aircraft.
July 2016 saw Boeing awarded a $127-million contract for the Phase II Pre-Milestone B risk-reduction phase. The contract covers definition of system specifications, including the environmental control system, the interior floor plan and electrical power lines. Other elements under study include the mission communication system, medical facility, executive interior, self-defense system and autonomous ground operations capability.
The Presidential Aircraft Recapitalization program is expected to enter the EMD phase in mid-2018. Unless, of course, Trump makes good on his word to cancel it first. And if the new Air Force One does survive his efforts, service entry around 2024 means that Trump may well never fly in the aircraft.