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Boeing loses $2 billion on Air Force One jets

Air Force One refuels at Joint Base Pearl Harbor-Hickam, Hawaii, on President Donald Trump's return to Washington D.C. from the North Korea summit, June 12, 2018. (U.S. Air Force photo by Senior Airman Brittany A. Chase)
October 26, 2023

In a recent development, Boeing has reported a staggering loss of $482 million related to the retrofitting of two 747 jets for the next generation Air Force One, a project that has proven to be financially burdensome for the aerospace giant, resulting in a total loss of over $2 billion.

The latest figure adds to the mounting losses, now surpassing $1 billion per jet, casting a shadow over the prestigious but financially straining project. The company’s challenges in producing the two 747 jets for the next generation of Air Force One have been compounded by soaring supplier costs and continuous delays in delivery, according to CNN.

CEO Dave Calhoun expressed regret last year over the decision to sign the $3.9 billion contract with the Air Force, stating, “Air Force One, I’m just going to call a very unique moment, a very unique negotiation. A very unique set of risks that Boeing probably shouldn’t have taken. But we are where we are.”

CNN reported that the company’s most recent loss on the Air Force One program was caused by a combination of labor instability, changes in engineering, and negotiations with a supplier. While increased costs for defense contracts often result in more U.S. taxpayer dollars being given to companies, the Air Force One contract is unique because former President Donald Trump negotiated a fixed-price contract, which forces Boeing to cover the additional costs rather than taxpayers.

READ MORE: Biden using Air Force One’s ‘lower stairs’ to avoid more embarrassing falls: Report

In the face of current challenges, Calhoun has remained optimistic, telling investors, “In a fixed price environment, any unplanned hurdles can introduce unrecoverable costs. At the end of the day, we have two airplanes to build. We’re getting past these hurdles and are committed to delivering two exceptional airplanes for our customer.”

Despite Boeing’s financial setbacks with the Air Force One project and the company’s total loss of $25.5 billion since the grounding of its 737 Max jet in 2019, Boeing is reportedly navigating its way back to stability. The company’s resilience is highlighted by the 13% increase in revenue to $18.1 billion and the company’s plans to boost the production of 787 jets and increase 737 production.

The company’s shares, reflecting investor confidence, witnessed a 3% rise in premarket trading, according to CNN. Despite the third quarter’s core operating loss of $1.1 billion, the company hopes for a potential turnaround to occur with its strategic adjustments and plans for the future.

This news article was partially created with the assistance of artificial intelligence and edited and fact-checked by a human editor.