June 20, 2022

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Boeing CEO slams Donald Trump’s Air Force One deal as one that ‘probably shouldn’t be taken’

4 min read
Boeing CEO slams Donald Trump's Air Force One deal as one that 'probably shouldn't be taken'

Boeing CEO Dave Calhoun, says that the deal between the company and Trump to construct Air Force One is a risk that the business “probably shouldn’t have taken.” The statement was made on Wednesday, during the conference call to discuss Boeing’s results from the first quarter of 2022 in which it was revealed that the Air Force One project was more than its anticipated budget over the past few months. In the financial report (PDF), Boeing says it’s losing $1.1 billion in the deal.

“Air Force One is going to call a truly special moment, an exclusive negotiation, a special set of risks that Boeing might not have taken, but we’re exactly where we want to be and we’re planning to make amazing aircraft. We’ll also be aware of the cost that comes with it,” states Calhoun.

In the year 2018, Boeing reached an agreement with then-president Trump to build and develop two brand new Air Force One airplanes for the fixed amount that was $3.9 billion. As per acquisition.gov, a firm-fixed-price contract is when an individual contractor (in this instance, Boeing) is paid the same amount for a project regardless of what costs — or, potentially losses it suffers.

The agreement was signed following Trump’s threatening (via tweets, of course) to end the prior Air Force One order to cut costs in 2016. The original plan was believed to cost between $4 billion and $5 billion. This new deal also changed the timeframe for building the plane. Trump seemed to want it completed in 2021 rather than 2024 as reported by CNN.

Boeing did not meet the deadline it was supposed to meet, and this shouldn’t be a huge surprise. Since the announcement in the past, the company has been hit due to its controversy surrounding the Boeing 737 Max (which caused the chief executive, Dennis Muilenburg, to be removed to be replaced with Calhoun) in addition to mention the global pandemic.

Calhoun stated during the conference call on Wednesday that COVID-19 was especially difficult to the firm’s efforts on the latest Air Force One. “In the defense world when a COVID line goes down or a group of workers steps out, we don’t have a whole bunch of cleared people to step into their shoes,” Calhoun stated, pointing out that there are “ultra-high” security clearances required for the plane of President Obama. “We just got whacked in several different areas.”

He also stated that he did not want to sign any further fixed-price contracts, and was of a “very different philosophy” about fixed-price contracts as compared to the firm’s previous CEO.

Calhoun states that, in the government contracting process, Boeing had a “messy quarter” partly due to”the” Air Force One project. “You’ll remember it was a public discussion which took place a while in the past. We took some risks without being aware that COVID would be in the pipeline and we didn’t know that an inflationary atmosphere would be able to take over as it did.”

The newspaper Politico is saying that Boeing is now planning to launch Air Force One’s first Air Force One in 2024 and the second aircraft next year. CNBC but reports that it may be delayed more and that Boeing’s financial report declares that it will be unable to make money from the project.

CNBC’s report also contains a Tweet from Boeing which calls the project (which is, as previously mentioned, currently over a billion dollars of dollars in debt) and “outstanding value to taxpayers.” The tweet further states the tweet states that “President Trump negotiated a good deal on behalf of the American people.” However, this is a concern — If Boeing is taking huge losses in the construction, and then writes them off on its taxes, will the public more benefitted from the claimed savings?

One last note is that $2 billion for an aircraft is an incredible sum of cash. Do you know that the F-35 is renowned for its obscene over-budget with the estimated final cost to be about $1.6 trillion? At present, Lockheed says it’s built about 800 aircraft, which means that each one is costing approximately $2 billion, although the figure is expected to decrease when more aircraft are manufactured.

My colleague Andrew Hawkins has pointed out that Boeing’s Air Force One(s) will likely be extremely technologically advanced and will be able to evade missiles and withstand EMPs and nuclear fallout but there’s a price to building one, as he said, “the most resilient, high-tech, tricked-out jumbo jet in existence.”

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