The CEO of Boeing said that the aviation manufacturer has so far lost $660 million in a deal with former President Donald Trump to produce two new airplanes to serve as Air Force One, the president’s official transport.
Boeing CEO Dave Calhoun told investors during the company’s quarterly earnings call Wednesday that, in hindsight, Boeing should not have taken the deal because of the losses it incurred.
“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 shouldn’t have taken,” Calhoun said on the call. “But we are where we are, and we’re going to deliver great airplanes.”
Boeing struck a deal with then-President Trump to modify two 747-8i jets into Air Force VC-25B aircraft that could be used as Air Force One. The deal between Boeing and the Air Force was personally negotiated by former CEO Dennis Muilenburg, and then-President Trump was also personally heavily involved with the negotiations. Defense One noted that much of the deal was negotiated between Muilenburg and Trump at the White House and at Trump’s Mar-a-Lago estate.
Trump, an aviation enthusiast who flew between stops in the 2016 campaign on his own private plane, a converted Boeing 757-200 jetliner jokingly dubbed “Trump Force One,” reportedly negotiated everything from the contract to the color scheme of the airliner, selecting a red, white, and blue color scheme to replace the light blue and white color scheme used for the current aircraft. Trump had previously criticized the deal before he took office. “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion, Cancel order!” Trump tweeted in 2016, via Business Insider.
The final $3.9 billion deal between the Air Force and Boeing was reached in February 2018. When accounting for other costs in building the planes, including a brand new hangar complex at Joint Base Andrews, the full cost of the program is expected to be about $5.3 billion. The deal included a “fixed-price” agreement, in which Boeing, not American taxpayers, would bear any costs above and beyond the agreed-upon cost. To save money, Boeing is not building the aircraft from the ground up, but is instead repurposing two existing 747-8i aircraft that were intended to be sold to a Russian airline that went bankrupt in 2015, Business Insider reported.
In its quarterly earnings report, Boeing said that the losses were “primarily driven by higher supplier costs, higher costs to finalize technical requirements and schedule delays.” Boeing officials told Defense One that the company is involved in a dispute with a subcontractor, as well as ongoing supply chain bottlenecks and labor shortages, which are driving up costs and pushing back the timeline. The planes were scheduled to deploy in 2024 and 2025, but the Air Force’s budget proposal for fiscal year 2023 said that the planes may not be ready to be put into service until 2026.
According to the White House website, “Air Force One” refers specifically to the two “highly customized” jetliners equipped to transport the president. The current aircraft, designated VC-25A, is equipped with hardened electronics to protect against electromagnetic pulse attacks, secure communications equipment, and midair refueling capability to keep the president and staff in-flight for as long as necessary. The aircraft also includes a working suite for the president, along with two food preparation galleys, quarters for the president and guests, and a fully-functional operating room with a permanent doctor on staff.