Trump Says U.S. Should 'Cancel Order' for New Air Force One, Citing Costs -- 3rd Update
December 06 2016 - 10:39AM
Dow Jones News
By Damian Paletta and Doug Cameron
President-elect Donald Trump on Tuesday suggested the U.S.
government should cancel its order with Boeing Co. for a new
version of Air Force One, making the aircraft maker the latest
company to come under scrutiny by the incoming
commander-in-chief.
Mr. Trump tweeted that the order for new planes to shuttle the
U.S. president should be canceled because "costs are out of
control, more than $4 billion."
Representatives for Boeing and the Pentagon couldn't immediately
be reached for comment.
"The plane is totally out of control," Mr. Trump said in brief
remarks in the lobby of Trump Tower in New York City.
"I think its ridiculous," he said. "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."
The current Boeing aircraft used as Air Force One have been in
flight since the Reagan administration. The two heavily-modified
747-200 planes used by the president are due to reach the end of
their planned 30-year life in 2017.
In January, Boeing secured a contract from the Pentagon to start
development work on the 747-8 jumbo jets that would replace the
aging planes. The deal includes modifications to the aircraft, from
sophisticated communications equipment to other upgrades such as
antimissile devices, experts said.
However, Boeing has yet to secure deals to build the planes. The
U.S. Air Force is examining an initial fleet of two planes but has
said it may seek a third.
The Air Force earmarked $1.65 billion between 2015 and 2019 for
two replacement jets, but hasn't detailed the expected cost or
delivery dates for the replacement planes. The Air Force had
previously said it was looking to introduce the planes in 2021.
There are specific rules about how the U.S. negotiates with
federal contractors, but Boeing relies on U.S. government business
for sizable sales. The Pentagon generated sales of $18.8 billion
for Boeing's defense arm in 2015, according to its annual report.
This excludes foreign sales brokered by the defense department.
Boeing was the U.S. government's second biggest federal contractor
last year behind Lockheed Martin Corp., according to federal
procurement data.
The Pentagon said that while Boeing was the sole bidder to build
the planes, other companies would be able to compete for
maintenance and upgrade work.
Boeing shares were 1.3% lower in early trading.
This is the first time since becoming president-elect that Mr.
Trump has singled out a particular government contractor in a
procurement deal. If the U.S. were to walk away from the Boeing
deal, the only other manufacturer that makes large planes capable
of such international flights is Airbus Group SE. Boeing and Airbus
frequently compete against each other for large contracts around
the world.
Boeing's 747-8 carries a list price of $378 million and uses
General Electric Co. engines.
Last week, Mr. Trump appointed Jim McNerney, a former Boeing
chief executive, to be on a new board of executive advisers he
plans to meet with to discuss economic, regulatory, and labor
issues.
Mr. Trump has used Twitter extensively throughout his
presidential campaign and following the election. Tuesday's tweet
is his latest rebuke to a major U.S. company. Mr. Trump has also
used Twitter to hit Ford Motor Co. and United Technologies Corp.'s
Carrier unit for plans to move production overseas.
--Joshua Jamerson contributed to this article.
Write to Damian Paletta at damian.paletta@wsj.com and Doug
Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
December 06, 2016 10:24 ET (15:24 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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