BA Boeing Co

By Doug Cameron and Damian Paletta 

Boeing Co. on Tuesday became the latest company to be singled out by President-elect Donald Trump, who suggested the aircraft manufacturer was trying to rip off taxpayers in the planned construction of jets to replace the existing Air Force One fleet.

"I think Boeing is doing a little bit of a number," Mr. Trump said in brief remarks in the lobby of Trump Tower in New York City. "We want Boeing to make a lot of money but not that much money."

Using Twitter, Mr. Trump wrote of the planned deal, "Cancel order!"

The move broadens the incoming commander-in-chief's effort to influence industrial policy beyond rebuking companies for moving jobs overseas.

The broadsides at Boeing marked at least the third time in the past week that Mr. Trump has called out a specific company over its business practices. On Dec. 1, he announced that the Carrier unit of United Technologies Corp. would retain 800 jobs in the U.S. after he pressed the company not to move certain operations to Mexico. On Dec. 2, he chided Rexnord Corp. about its plans to move some operations to Mexico.

Senior Trump transition officials have scheduled a meeting next week with top Silicon Valley executives, some of whom had been targeted by Mr. Trump during the campaign. Mr. Trump floated the idea of boycotting Apple Inc. after reports that the company wouldn't decrypt a phone as requested by the Federal Bureau of Investigation during its probe into a 2015 terrorist attack.

Mr. Trump on Tuesday also met with SoftBank Group Corp. Chairman Masayoshi Son, a Japanese billionaire who said he would invest $50 billion in the U.S. and create 50,000 new jobs. Some investors and analysts have said Mr. Son could now try to revive an abandoned effort to merge Sprint Corp. -- which Mr. Son's conglomerate controls -- with T-Mobile US Inc. Regulators had previously raised questions about the deal.

Many business executives have praised what they view as parts of Mr. Trump's agenda -- such as tax reform and infrastructure investment -- that they believe will help the economy grow. But some of his trade plans, particularly proposed tariffs on imports from China and Mexico, have worried executives, who have taken notice of his tendency to single out companies.

"Some of us may share our turn in the bull's-eye," Caterpillar Inc. Chief Executive Doug Oberhelman told reporters on a conference call Tuesday.

Senior advisers to Mr. Trump have signaled that he plans to continue intervening in issues that pertain to specific businesses as he sees fit once he is sworn in on Jan. 20.

"This really speaks to the president-elect's focus on keeping costs down across the board with regard to government spending," Trump spokesman Jason Miller said on a call with reporters.

Mr. Trump's "Air Force One" remarks make the first time he openly attacked a company by threatening to block a procurement contract. It is likely to send signals to other government contractors about his future involvement in their bidding.

"As a general rule, government procurement experts on both sides, the government and the contractor-side, will be extremely anxious," said Steven Schooner, co-director of the government procurement law program at George Washington University Law School.

Chicago-based Boeing hasn't yet secured deals to build the planes that would replace the current aircraft used as Air Force One, which have been in flight since the administration of George H.W. Bush.

The two heavily modified 747-200 planes currently used by the president are due to reach the end of their planned 30-year life in 2017. This can be extended a few more years, and the Air Force has said in budget documents it wanted to have the first new jet in place by 2023 or 2024.

In a tweet Tuesday, Mr. Trump alleged that the cost of building the new presidential aircraft fleet would exceed $4 billion.

"The statistics that have been cited [by Mr. Trump], shall we say, don't appear to reflect the nature of the financial arrangement between Boeing and the Department of Defense," said Obama White House spokesman Josh Earnest.

Mr. Trump, who flies a Boeing private jet, criticized the company during the election campaign and accused it of planning to moves jobs to China, a charge it denied.

Shares in defense companies have climbed sharply since Mr. Trump's election as investors expected the military budget to rise, with Mr. Trump focusing on reforms to the Pentagon bureaucracy to help foot the bill.

Defense stocks shrugged off early losses following Mr. Trump's remarks and ended the day higher, in line with the broader market.

"The contractors are really bemused," said Loren Thompson at the Lexington Institute, a think tank part-funded by Boeing and other defense companies.

Boeing has so far received development deals worth about $170 million, it said on Tuesday, to convert the 747-8 jumbo jets that would replace the existing fleet.

"We look forward to working with the US Air Force on subsequent phases of the program," Boeing said Tuesday.

An Air Force spokesman said they have budgeted $2.7 billion in development funds through 2021 for the project "but expect this number to change as the program matures with the completion of the risk reduction activities."

Efforts to replace the fleet of aircraft and helicopters that serve the president have come under attack by previous administrations and even been canceled. The Pentagon is now looking to balance costs and capabilities by rewarding contractors with higher profits if they deliver on time and under budget.

Boeing is the second-largest Pentagon contractor after Lockheed Martin Corp. -- which is building the fleet of new helicopters that will serve as Marine One -- and makes fighter jets, surveillance planes, bombs and other systems that generated sales of almost $19 billion from the Pentagon last year, a fifth of its total revenues.

The Air Force has previously specified it needed a four-engine plane to serve as Air Force One. Airbus Group SE is the only other maker of such jets, but experts said it was unlikely to bid even if the presidential replacement program is restarted. Airbus didn't respond to a request for comment.

--Carol E. Lee contributed to this article.

Write to Doug Cameron at doug.cameron@wsj.com and Damian Paletta at damian.paletta@wsj.com

(END) Dow Jones Newswires

December 06, 2016 17:42 ET (22:42 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.