{"id":58581,"date":"2022-04-27T17:32:57","date_gmt":"2022-04-27T17:32:57","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2022\/04\/27\/boeing-ceo-regrets-air-force-one-deal-amid-big-quarterly-losses\/"},"modified":"2026-08-08T00:20:18","modified_gmt":"2026-08-08T00:20:18","slug":"boeing-ceo-regrets-air-force-one-deal-amid-big-quarterly-losses","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/air\/2022\/04\/27\/boeing-ceo-regrets-air-force-one-deal-amid-big-quarterly-losses\/","title":{"rendered":"Boeing CEO regrets Air Force One deal amid big quarterly losses"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">WASHINGTON \u2014 Boeing reported $1.3 billion in cost overrun charges among some of its major defense programs in its most recent quarter, lowering its defense unit\u2019s sales in what its chief executive called a \u201cmessier quarter.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Much of those charges \u2014 a little more than $1 billion \u2014 came from the development of the new <a href=\"https:\/\/www.defensenews.com\/air\/2021\/06\/08\/delivery-of-new-air-force-one-planes-could-be-delayed-until-2025\/\" target=\"_blank\">Air Force One<\/a> and the U.S. Air Force\u2019s T-7A Red Hawk trainer, the company said in its quarterly earnings statement Wednesday.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a call that same day, Boeing CEO Dave Calhoun suggested the company should not have accepted the Trump administration\u2019s terms in 2018 on the new Air Force One, as the former administration engaged in hardball negotiations to drive down costs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Boeing\u2019s defense, space and security division saw its sales in the first quarter of 2022 drop to $5.5 billion, down 24% from the same period last year. This decline was largely due to lower volumes and its charges on fixed-price development programs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Calhoun said in an MSNBC interview Wednesday morning that Boeing reported a \u201cmessier quarter than any of us would have liked.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The VC-25B Air Force One program saw the largest charge, totaling $660 million. This stemmed from schedule delays, rising supply costs and higher costs to finalize technical requirements. The aircraft was originally due for delivery in 2024, but the Wall Street Journal reported earlier this month it could be at least two years behind schedule.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Another $367 million in charges came from the T-7, the Air Force\u2019s next jet training aircraft. Supply chain constraints, complications from the COVID-19 pandemic and inflation complicated ongoing negotiations with suppliers, Boeing said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Boeing\u2019s Securities and Exchange Commission filings also showed a $165 million charge for the KC-46A Pegasus tanker, driven mainly by higher supply chain costs, and a $78 million charge for the MQ-26 Stingray drone, stemming from additional testing requirements from the Navy as well as supplier quality problems.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">During the call, Calhoun said Boeing still has high confidence in the T-7\u2032s future and that other programs have weathered similar pressures. He added that he expects the MQ-25 Stingray program, a Navy aerial refueling drone for which Boeing won the contract in 2018, will also turn out to be another good bet for the company. Despite both programs having higher-than-anticipated development costs, Calhoun said, the military will be flying them both for a long time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But he expressed regret over the path Boeing took on the new Air Force One during the Trump administration.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In December 2016, then-President-elect Donald Trump tweeted \u201ccosts are out of control\u201d for the more than $4 billion price tag for the new Air Force One and that he wanted to cancel the order. In July 2018, the Air Force awarded Boeing a $3.9 billion contract for two new Air Force Ones. The White House said that represented a dramatic price drop from the original proposal for the cost-plus contract, which it said was valued at $5.3 billion.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That contract represented \u201ca very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn\u2019t have taken,\u201d Calhoun said. \u201cBut we are where we are, and we\u2019re going to deliver great airplanes.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Calhoun said pandemic-related inefficiencies were largely responsible for the cost overruns it experienced, and that they have been particularly acute for the Air Force One program.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cIn the defense world, when a COVID line goes down, or a group of workers steps out, we don\u2019t have a whole bunch of cleared people to step into their shoes,\u201d Calhoun said. \u201cIt has always been a tougher implication, and for the VC-25B, where the clearances are ultra high, it\u2019s really tough. So we just got whacked in a number of different areas.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Boeing CEO Dave Calhoun said the Air Force One deal was \u201ca very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn\u2019t have taken. But we are where we are.&#8221;<\/p>\n","protected":false},"author":7,"featured_media":66454,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":7,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":{"4":{"categories":["news","daily-news-roundup","newsletters","left-column","home"],"primary_category":"news"}}},"categories":[7,160,12,36],"tags":[],"coauthors":[3412],"class_list":["post-58581","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-air","category-daily-news-roundup","category-industry","category-newsletters"],"acf":{"subheadline":"","legacy_arc_id":"7X2DGQ255REFDLQZG4VILRP7MA","arc_canonical_url":"\/industry\/2022\/04\/27\/boeing-ceo-regrets-air-force-one-deal-amid-big-quarterly-losses\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Boeing CEO regrets Air Force One deal amid big quarterly losses - Defense News<\/title>\n<meta name=\"description\" content=\"Boeing CEO Dave Calhoun said the Air Force One deal was \u201ca very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn\u2019t have taken. 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