Boeing CEO Dave Calhoun says the company will lose $660 million on the $4 billion deal it signed to build two new replacements for the VC-25 executive transports that are often used as Air Force One. In an earnings call on Wednesday Calhoun appeared to suggest that former President Donald Trump got the better of the country’s biggest company in the deal, which the former president negotiated personally. “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,” Calhoun said. “But we are where we are, and we’re going to deliver great airplanes.”
The procurement process was well underway when Trump intervened shortly after being sworn in and when the fixed-cost deal was announced he claimed he’d saved taxpayers $1.4 billion. Under the deal hammered out between Trump and former Boeing CEO Dennis Muilenburg at Mar-a-Lago, Boeing agreed to cover any cost overruns. Supply chain issues, a dispute with a contractor and spiraling costs have put the project firmly in the red and years behind schedule. It’s now estimated the new aircraft won’t be ready until 2026.
Good on President Trump for saving us money. That said, I hope the go back to the existing paint scheme.
I agree and I liked the old scheme, and I understand why it was originally chosen but I do prefer this paint scheme.
“Boeing agreed to cover any cost overruns. Supply chain issues, a dispute with a contractor and spiraling costs have put the project firmly in the red and years behind schedule.” So Calhoun (making 21 million/year) states profitability at Boeing is dependent upon managerial incompetence and “cost overruns”. Boeing isn’t going regain it’s credibility and status as a corporate super power until people like Calhoun are fired. Stock is well below it’s 52 week low and falling again today …
To be fair, it often is typical for government contractors to have to eat the cost of overruns. In this case, it was just horrible (mis)management, again, at Boeing.
So Boeing is now 2/3 of the way into the money Trump says he saved by hard bargaining?
Did Boeing not read/watch about The Donald’s reputation as a negotiator?
Imagine what kind of deal we the tax payers would have had if Biden had been the negotiator. But also remember that Boeing has many billions in military contracts and they can hide these losses in those cost over runs.
I see the deal we have every time I buy gas…
I call BS.
Yea, they didn’t get 1.4 billion… that is like me saying I lost 1.4 billion when I sold my used truck to the government… because they didn’t give me $1,400,008,000 for my old truck that was worth $8,000…
If Boeing was originally asking $5.4B, then we saved $1.4B. Frankly $2B power airplane is absurd. They’re taking an off the shelf airplane, putting a bizjet interior and some extra radios, maybe refueling capability? How can they possibly lose money? Stuffing the seats with cash?
$2B per airplane
Oh and to top it off they can claim it as a loss on the taxes etc.
They should have bought the Saudi 747-800 for $95 million and started with that.
If the person you are dealing with wrote a book on negotiating, maybe you need to read the book?