Boeing disclosed Wednesday that the company would take a new $766 million charge on its 2018 contract with the Trump administration to modify two 747 jumbo jets to serve as Air Force One. The program has suffered repeated setbacks over the last few years. The delivery of the two aircraft was delayed again this quarter and they are behind schedule by at least four years. Boeing Chief Executive Dave Calhoun admitted that “critics were right” to slam the contract to build the next-generation Air Force One aircraft. Back then, President Donald Trump had managed to secure a deal with Calhoun’s predecessor, Dennis Muilenburg, that put a ceiling to the cost of replacing Air Force One at $4 billion.
“We didn’t get enough price,” Calhoun told CNBC while talking about the contract, and further added that the “biggest mistake” on the Air Force One “was the fixed price nature” of the contract. Prior to this, Boeing already booked about $1.1 billion in charges on the program since 2020 and now the losses have skyrocketed to $1.9 billion. Earlier this year, the program met with an unexpected disruption when one of the 747s being refurbished was potentially damaged due to the jacks used by a few workers. A probe later found one employee working on the project was not properly credentialed and another worker failed a drug test. This came a few months after a couple of empty tequila mini-bottles were found on one of two aircraft at Boeing’s production facility in San Antonio.
Boeing said the Air Force One losses were “driven by higher costs to incorporate certain technical requirements, increases to factory modification labor and support engineering, schedule delays and higher supplier costs.” The company further warned that “risk remains that we may record additional losses in future periods.” Boeing has been hit by one problem after another over the last several years and the new losses could prove to be fatal for the aerospace company. The company not only took a massive $2.8 billion hit from its high-profile defense and space businesses but also continued to report losses from its core commercial jet unit.