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Boeing Agrees to Build Air Force One for Under $4B

Boeing Agrees to Build Air Force One for Under $4B

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Thursday, 22 December 2016 08:19 AM

Boeing Co. Chief Executive Officer Dennis Muilenburg said he told President-elect Donald Trump that the planemaker can build a new version of Air Force One for less than $4 billion, after the Republican criticized the cost of the aircraft.

“We’re going to get it done for less than that, and we’re committed to working together to make sure that happens,” Muilenburg said as he left the president-elect’s Mar-a-Lago resort in Florida on Wednesday.

Muilenburg said he gave Trump his “personal commitment on behalf of the Boeing Company.” The Chicago-based company will build the new 747 jets and outfit them to the Pentagon’s specifications, which include secure communications and anti-missile defenses. Boeing is just beginning work on the systems that will go into the new presidential aircraft.

“We’re looking to cut a tremendous amount of money off the price,” Trump told reporters, referring to Air Force One.

Lockheed Martin

Trump also met with Lockheed Martin Corp.’s Marillyn Hewson after Muilenburg’s visit on Wednesday and then with a group of high-ranking military officers. Trump has said that costs for Lockheed’s F-35 fighter jet are “out of control.”

“We’re trying to get costs down, costs,” Trump told reporters after the officers left. “Primarily the F-35. That program is very, very expensive.”

Hewson left her meeting without commenting. Trump didn’t say whether he had won any concessions from her.

“It’s a dance, you know. It’s a little bit of a dance,” he said. “We’re going to get the costs down and we’re going to do it beautifully.”

Defense Spending

Defense companies stand to benefit from a resurgence in military spending promised by Trump and already underway in Western Europe and Asia as global tensions rise. In fact, it could be the best environment for investing in defense stocks in a decade, Ron Epstein, a defense analyst with Bank of America Corp. said in a Dec. 7 presentation.

Trump’s Twitter outbursts at the two largest U.S. defense contractors may be an attempt to harmonize two competing objectives: higher spending on the military and “reform and discipline,” said Richard Aboulafia, a defense analyst with Teal Group, said in a report this month. “Those goals are tough to reconcile.”

The Pentagon has already budgeted $3.2 billion for research and development, military construction and acquisition of two of the Air Force One planes through fiscal 2021, said Kevin Brancato, the lead government contracts analyst for Bloomberg Government. More money is anticipated in the two years after that.

Boeing 747-8 planes average about $225 million each, he said, which means most of the expenses will go to equipping the planes for presidential use.

Fighter Jet

The Pentagon has rebutted Trump’s criticism of the troubled F-35. Lieutenant General Christopher Bogdan, who heads the office responsible for developing and acquiring the fighter jet, told reporters on Monday that the project has “basically been on schedule” and “on budget” since 2011. Bogdan was among the people Trump met with Wednesday.

The plane, the most expensive weapon system ever, has suffered a series of delays and missteps blamed on its complicated technologies, including stealth capabilities and versatility. Different configurations of the $379 billion Joint Strike Fighter are supposed to become the mainstays of the Air Force, Navy and Marine Corps.

Trump spoke briefly with reporters earlier Wednesday but didn’t mention his meetings with the two executives. They were publicly announced shortly before Muilenburg arrived at the resort.

 

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Boeing Co. Chief Executive Officer Dennis Muilenburg said he told President-elect Donald Trump that the planemaker can build a new version of Air Force One for less than $4 billion, after the Republican criticized the cost of the aircraft."We're going to get it done for...
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Thursday, 22 December 2016 08:19 AM
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