“Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion,” Trump said Tuesday on Twitter. “Cancel order!”
According to Bloomberg, Boeing is the latest major U.S. company to be singled out by Trump, who last week announced a deal with United Technologies Corp. to keep a U.S. factory open instead of moving production to Mexico. The president-elect, who turned U.S. employment and foreign trade into defining issues during the campaign, has drawn both praise and criticism for directly intervening in the affairs of individual corporations.
“The plane is totally out of control,” Trump said in a brief appearance in the lobby of Trump Tower on Tuesday. “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, whose planes have been used to ferry presidents since 1943, fell 0.5 percent to $151.37 at 11:30 a.m. in New York.
“We are currently under contract for $170 million to help determine the capabilities of this complex military aircraft that serves the unique requirements of the President of the United States,” Boeing spokesman Todd Blecher said in an e-mail. “We look forward to working with the U.S. Air Force on subsequent phases of the program allowing us to deliver the best plane for the president at the best value for the American taxpayer.”
Fleet Replacement
The Pentagon is looking to replace its aging fleet of Boeing 747-200 aircraft, which were built in the 1980s and will reach the planned 30-year service life in 2017. Officials have said the next Air Force One 747-8 jets are estimated to begin operations in fiscal 2023. The Air Force expects the planes to have the range to fly between continents and comparable interiors to the current 747, whose features include work and sleeping quarters for the president and first family.
Beyond such amenities, the planes must be outfitted for highly advanced, secure communications and classified defensive capabilities that make them flying fortresses. After the Sept. 11 terrorist attacks, President George W. Bush stayed airborne for much of the first few hours. The new planes will also be equipped for mid-air refueling.
“This is madness,” Richard Aboulafia, an aerospace analyst at Teal Group, said of Trump’s tweet. “I think about the complications, for example, if the president and his staff had to run the nation on 9/11 and afterwards without an Air Force One and my mind is kind of scrambled on that.”
The Pentagon already is budgeting $3.2 billion for research and development, military construction and acquisition of two of the planes through fiscal 2021, said Kevin Brancato, the lead government contracts analyst for Bloomberg Government. More money is anticipated in the two years after that. Boeing 747-8 planes average about $225 million each, he said, which means most of the money will go to outfitting the planes for presidential use.
Contract Costs
The costs of the contract are consistent with previous upgrades to aircraft specially modified to fly the president, Aboulafia said.
“This is what an Air Force One costs,” he said. “There have been no cost overruns. The ability to fly the president during a war is fundamentally expensive.”
There’s no clear alternative to Boeing to build a new Air Force One, especially not for a president who wants to buy U.S. products. The only other option for a four-engine plane the Air Force is seeking would come from Europe’s Airbus Group SE, which said in 2013 that it wouldn’t make a proposal.
The Air Force said last year that it was giving Boeing the contract without competition because its plane is the only one manufactured in the U.S. “that when fully missionized meets the necessary critically important capabilities” that a president needs. But the service also said it would encourage other companies to bid for the plane’s special equipment.
Targeting Companies
On Sunday, discussing the deal with the Carrier unit of United Technologies to keep some jobs in the U.S., Vice President-elect Mike Pence said on ABC’s “This Week” that Trump would decide whether to intervene with specific companies “on a day-by-day basis.” Trump previously held stock in Boeing but sold all of it in June, transition spokesman Jason Miller told reporters on a conference call.
Miller said he couldn’t answer whether Trump or his top advisers had been in contact with either the company or the Pentagon. Details about Trump’s goal, whether to scrap the plane or renegotiate the cost, will emerge after he’s sworn in.
“This really speaks to the president-elect’s focus on keeping costs down across the board,” Miller said. The $4 billion price tag “is a very big number.”
Boeing Focus
Tuesday’s tweet wasn’t the first time Trump has mentioned Boeing. At a February rally in South Carolina, where the company makes the 787 Dreamliner, he said the company “is building massive plants in China.” That would be problematic if the Asian nation cut the value of its currency.
To bolster its standing in China, Boeing recently announced plans to open a plant there to install seats on single-aisle 737 jetliners being delivered to Chinese carriers. In a speech Dec. 2, Boeing Chief Executive Officer Dennis Muilenburg called on Trump and Congress to ensure that U.S. companies have the tools necessary to compete in a global economy.
For Boeing, the largest U.S. exporter, that means a reformed tax code, a fair global trade system, regulatory changes that make it easier to close foreign defense sales and re-opening the U.S. Export-Import Bank for business, Muilenburg said in remarks to the Illinois Manufacturers’ Association.
“If we do not lead when it comes to writing these rules, our competitors will write them for us,” Muilenburg said. “For Boeing, that could result in higher costs, disrupted supply chains and regulations that diminish our ability to sell products around the world.”