The two Air Force One presidential planes that the US President travels on during his travels have inflicted heavy losses on Boeing, as the American airline announced on Wednesday additional losses amounting to $482 million, spent on modernizing two 747 presidential planes, and Boeing has lost so far. More than $1 billion was spent on manufacturing both aircraft.
The company has been reporting losses in manufacturing the two planes for years, with CEO Dave Calhoun admitting last year that the company should never have signed the contract with the US Air Force to produce the two planes for $3.9 billion.
Supplier costs have risen since then, and the delivery date has been constantly pushed back; Boeing incurred losses of $1.45 billion last year, and $318 million in 2021.
Company losses
The company said that the recent loss in the program was the result of engineering changes, labor instability, in addition to resolving negotiations with one of its suppliers.
Often times, high defense contract costs can be passed on to American taxpayers, but under pressure from then-President Donald Trump who was threatening to cancel the contract for the two planes, Boeing agreed to a fixed-price contract for the two new planes.
“In a fixed-price environment, any unplanned setbacks could result in unrecoverable costs,” Calhoun told investors on Wednesday.
He added, “At the end of the day, we have two aircraft to build. We have overcome these obstacles and are committed to providing two exceptional aircraft to our customers.”
On Wednesday, Boeing reported another core operating loss of $1.1 billion
Technically, the planes are known as VC-25Bs, since the famous Air Force One designation is reserved for when the president is actually on any plane operated by the US Air Force, not when it is on the ground, let alone under construction.
The recent loss of two Air Force One planes is only a fraction of the losses reported by the struggling plane manufacturer, which has reported losses in all but two quarters since early 2019.
Boeing business results
The company’s total losses now amount to $25.5 billion since the grounding of its aircraft, the 737 MAX, for 20 months starting in March 2019, after two fatal crashes that killed 346 people.
On Wednesday, Boeing reported another core operating loss of $1.1 billion, or $3.26 per share. While this represents a 65 percent decline from the loss it reported in the same quarter a year earlier, it is worse than the loss per share of $2.96. dollar.
Revenues were slightly better than expectations, rising 13 percent to $18.1 billion, and while the company reduced the number of 737 MAX planes it expects to deliver this year, it announced that it is increasing the number of 787 planes it manufactures to five planes per month.
2023-10-25 21:42:33
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