Boeing makes US$3.9 billion deal with Donald Trump to provide two Air Force One planes

Boeing stock rose 1.4 per cent to US$368.54 – an all-time high for the company

PUBLISHED : Wednesday, 28 February, 2018, 1:48am
UPDATED : Wednesday, 28 February, 2018, 2:39am

Boeing said Tuesday it had reached a US$3.9 billion agreement to build two Air Force One planes after addressing Donald Trump’s criticism over hefty costs associated with the presidential aircraft.

“President Trump has reached an informal deal with Boeing on a fixed-price contract for the new Air Force One programme,” Deputy Press Secretary Hogan Gidley said. 

He said the contract will save taxpayers more than US$1.4 billion, but those savings could not be independently confirmed.

Earlier on Tuesday, Boeing tweeted that it “is proud to build the next generation of Air Force One, providing American Presidents with a flying White House at outstanding value to taxpayers.”

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“President Trump negotiated a good deal on behalf of the American people,” it added.

But some have doubted whether the deal is must to shout – or tweet – about. 

Richard Aboulafia, a US aerospace analyst at Teal Group, said the White House was engaging in “political theatre and that “There’s no evidence of a discount.”

Earlier this month, the Pentagon released Air Force budget documents for financial year 2019 disclosing the US$3.9 billion cost for the two-aircraft programme. The same 2018 budget document, not adjusted for inflation, showed the price at US$3.6 billion.

Boeing would only have so much room to offer discounts given the high proportion of supplier content on Air Force One, from refrigerators to missile warning systems, Aboulafia said by phone.

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In December 2016, between his election and his inauguration, Trump lambasted the cost of the iconic aircraft as “ridiculous,” saying Boeing was planning on spending US$4 billion on the planes and threatening to cancel the contract if costs were not brought down.

Boeing at the time pledged to control costs on the planes. 

The Boeing 747-8s are designed to be an airborne White House able to fly in worst-case security scenarios, such as nuclear war, and are modified with military avionics, advanced communications and a self-defence system.

The legendary Air Force One jets – light blue and white liveried, with “United States of America” emblazoned on the fuselage and an American flag on the tail – are a powerful symbol of US might, but the current models are nearing the end of their 30-year lifespan.

Boeing stock was up 1.4 per cent at US$368.54 on Tuesday, trading at an all-time high.