Boeing CEO Dave Calhoun told investors Wednesday that the company may not have had to agree to a fixed-price contract with former president – and author of The Art of the Deal – Donald Trump to develop a new Air Force fleet. One.
The company has already lost $ 660 million in the development of the two 747s for the fleet following a 2018 deal that Trump struck with the company that led Boeing to take into account any changes in costs during the development process. The new fleet was originally scheduled to enter in 2024, but as reported by CBS News, Boeing predicts that the aircraft may be 17 months behind. The deal was made under another CEO – Calhoun took the helm of Boeing in January 2020, but he was on board when the deal was made.
Calhoun told investors during a review of the performance in the first quarter that the company “probably shouldn’t have accepted” the $ 3.9 billion fixed-price contract, but called the situation unique and said it would still deliver great aircraft. The fixed price agreement means that Boeing cannot charge the government for any cost overruns that may arise for any reason.
“Air Force One, I’ll just call it a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn’t have taken, but we’re where we are and will deliver great aircraft. And we will recognize the costs involved, “Calhoun said.
President Joe Biden, left, leaves Air Force One at Philadelphia International Airport in Philadelphia early Saturday, April 23, 2022, to board Marine One for a short trip to Wilmington, Del., For the weekend. Andrew Harnick / AP
The company says the higher costs are mainly due to higher supplier costs, higher prices to finalize technical requirements and delays in the schedule. Pandemic supply chain problems have plagued the world for the past two years.
In December 2016, Trump tweeted that the cost of the program was “out of control, more than $ 4 billion,” adding, “Cancel the order!” Boeing CEO Dennis Mullenburg then met with Trump several times to discuss the deal with Air Force One.
During the 2018 agreement, the Trump White House said the agreement would save taxpayers up to $ 1.4 billion.
The first airplane, officially named Air Force One, carried President Dwight D. Eisenhower in 1959, but it was President John F. Kennedy who brought the airplane into the jet age.
On Tuesday, White House spokeswoman Jen Psaki said she had no further details on the Boeing delay.
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Catherine Watson
Catherine Watson is a political reporter for CBS News Digital based in Washington, DC
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