Trump: Cancel sky-high deal for Air Force One
He calls $3.2B Boeing program ‘out of control’
President-elect Donald Trump called Tuesday for the government to cancel a deal with aircraft manufacturer Boeing for development of a new Air Force One.
The Air Force signed deals with Boeing in January and July to design certain aspects of the presidential aircraft, including its interior and its electrical and maintenance systems.
The U.S. Government Accountability Office estimated in March that the entire program would cost about $3.2 billion from the 2010 through 2020 fiscal years, including $2 billion for research and development.
Trump cited different numbers without providing the basis for them.
The military has not awarded a contract to assemble the presidential jets.
“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!” the presidentelect tweeted Tuesday morning.
Shortly after his tweet, he said at Trump Tower: “The plane is totally out of control. It’s going to be over $4 billion for the Air Force One program, and 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.”
Boeing said in a statement that its deal to develop the Air Force One aircraft is worth $170 million.
“We look forward to working with the U.S. 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,” Boeing said.
An Air Force spokesman, Capt. Michael Hertzog, said the military was working with Boeing to reduce costs.
Boeing plans to replace the two aging 747-200 aircraft that serve as Air Force One with two latestgeneration, modified 747-8 jets.
The Air Force pledged to “keep costs down” when it awarded the initial aircraft development contract to Boeing in January, but the military branch said the replacements are necessary.
“Parts obsolescence, diminishing manufacturing sources and increased downtimes for maintenance are existing challenges that will increase until a new aircraft is fielded,” Air Force Col. Amy McCain, manager of the Presidential Aircraft Recapitalization program, said in a statement at the time.
Richard Aboulafia, aviation analyst at the Teal Group, said the current Air Force One jumbo jets, which were made in the 1980s, are equipped with state-of-theart communication technology and defense mechanisms to survive nuclear war or terrorist attacks, he said.
Anything in the $3 billion to $4 billion range would be reasonable, and a belief otherwise is “completely ignorant,” he said.
“This is the wrong place to talk about cost control,” Aboulafia said. “People aren’t upset in Washington about a relatively small program being canceled. They’re upset we have a president who doesn’t understand what is needed to be president.”
Jeff Windau, a Boeing analyst at the Edward D. Jones financial services firm, said the threat to cancel the contract is more significant as scrutiny of defense deals, rather than as a blow to Boeing.
“I think it’s a very limited number of planes,” Windau said. “I don’t think canceling it is necessarily a realistic thing to be done.”
Boeing has a strong backlog of 5,600 planes ordered and valued at $400 billion and a large commercial business beyond the 747 program, which had 17 net orders this year.
“I think it’s more prestigious from the company’s perspective of manufacturing,” Windau said.
Trump’s skepticism could signal more hurdles for defense contracts generally.
“I think it’s something that might be revisited on the price and spending,” Windau said. “How much scrutiny are contracts going to have going forward?”
The undersecretary of Defense approved the plan to replace Air Force One in September 2015.
The goal was to replace the aircraft by the 2024 fiscal year.
It was not immediately clear Tuesday whether Trump, who owns a Boeing 757 that he uses as his personal aircraft, would or could intervene to halt the Air Force One deal after he takes office in January.
Regarding the possibility that Trump might want to use his own jet instead of Air Force One, Aboulafia was beside himself.
“That’s up there with talkingto-aliens-on-the-toaster weird,” he said.
Still, jittery stock market investors initially drove Boeing shares down, but they rebounded to close up 8 cents a share, or .05%, at $152.24.
Trump himself owned Boeing shares (BA) as of the filing of a financial disclosure form during his presidential campaign.
He owned Boeing stock worth $50,001 to $100,000, according to his disclosure document, but he sold all of his stocks in June.
Trump has taken a special interest in the aircraft manufacturer’s travails.
During a crisis surrounding the lithium batteries in Boeing ’s 787 Dreamliner aircraft, Trump tweeted in 2013 and 2014 that the company should excise the technology from the jets.
Earlier, he was ebullient about Boeing ’s prospects.
“@Boeing stock went way down because of 787- so I just bought stock in @Boeing,” he tweeted in January 2013. “Great company!”
“This is the wrong place to talk about cost control. People aren’t upset in Washington about a relatively small program being canceled. They’re upset we have a president who doesn’t understand what is needed to be president.” Richard Aboulafia, Teal Group