Trump on Boeing Air Force One contract: ‘Cancel order!’
US President-elect Donald Trump urged the government yesterday to cancel an order with Boeing Co to develop a revamped Air Force One - one of the most prominent symbols of the US presidency - saying costs were out of control. His bombshell was the latest example of how Trump is using his podium, often via brief Twitter messages, to rattle companies and foreign countries as he seeks to shake up business as usual in Washington. Trump, who takes office on Jan 20, took aim at what he called cost overruns even though the plane is only in development stages.
“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 said on Twitter. It was not immediately clear what prompted the timing of his complaint. Trump, who stressed during his election campaign that he would use his skills as a businessman to make good deals that benefit American taxpayers, then made a surprise appearance in the lobby of Trump Tower in New York, where he amplified his comments.
“The plane is totally out of control. I think it’s ridiculous. I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money but not that much money,” he told reporters. Boeing has not yet begun building the two replacements for the current Air Force One planes, which are scheduled to be in service by the 2024 fiscal year, and it was not clear what Trump’s source of information was for the cost.
The budgeted costs for the Air Force One replacement program are $2.87 billion for the fiscal years 2015 through 2021, according to budget documents. A March 2016 report from the Government Accountability Office, a watchdog agency, estimated the total cost of the two 747’s, which have to be extensively modified so they can function as an airborne White House, was estimated at $3.2 billion. Boeing has not yet been awarded the money to build the proposed replacements, and is currently working on engineering and designing the aircraft.
“We are currently under contract for $170 million to help determine the capabilities of these complex military aircraft that serve the unique requirements of the President of the United States,” the company said in a statement. “We look forward to working with the US Air Force on subsequent phases of the program allowing us to deliver the best planes for the president at the best value for the American taxpayer.”
Some of the statistics cited by Trump about the plane did not appear to reflect arrangements between Boeing and the Department of Defense, White House spokesman Josh Earnest said. Speaking to reporters, he added that Americans would expect that future presidents should benefit from upgrades to Air Force One. Boeing shares dipped after Trump’s tweet and were down around 0.4 percent in the early afternoon. Shares of several other major defense contractors were also lower. Trump, who sold his Boeing shares in June according to a spokesman, named former long-time Boeing CEO Jim McNerney to a high-profile business advisory council last week. McNerney could not be immediately reached for comment yesterday.
A New York real estate developer, Trump took aim at big corporations during his campaign, saying that they often harm ordinary Americans by sending jobs abroad. Since winning the Nov 8 election he has taken credit for pushing United Technologies Corp and Ford Motor Co to backtrack on outsourcing plans. Last week, after discussions with Trump, United Technologies Chief Executive Greg Hayes Carrier, agreed to keep 800 of 2,100 jobs at Indiana operations of the company’s Carrier unit, instead of moving all the jobs to Mexico as originally planned. The company agreed to keep another 300 jobs at a headquarters operation in the state.
Ford, meanwhile, in November allowed Trump to claim credit for a decision not to move production of a Lincoln sport utility vehicle to Mexico that the automaker had already made. Both Ford and United Technologies said they support Trump’s efforts to cut corporate tax rates and overhaul regulations, which could save the companies billions in the long run. But in the short term, his comments on Boeing put defense contractors on notice.
“The chilling effect on industry is huge, if you are a contractor,” said Franklin Turner, a partner specializing in government contracts at law firm McCarter & English. “To think that in 140 characters (the length of a Twitter message) the president can cancel a program is ridiculous. There would be a detailed review by legal professionals on the merits of the termination.” A Trump spokesman said that his comments about the plane reflected the president-elect’s desire to keep down costs across the board, and so save taxpayers’ money.
The US Air Force, which operates the presidential planes, first announced in Jan 2015 that Boeing’s 747-8 would be used to replace the two current planes that transport the US president. Boeing officials were caught off guard by Trump’s comments since the company is simply meeting requirements mapped out by the Air Force in consultation with the White House, said defense consultant Loren Thompson, who has close ties to Boeing and other companies.
The cost of the planes is high because of the unique security requirements and communications equipment, Thompson said. “Air Force One has unique mission requirements, including possibly having to operate in a nuclear war,” Thompson said. “Of course it’s not like buying a vanilla Boeing jumbo jet.” US presidents have used Boeing planes since 1943, according to the company’s website. — Reuters