Afternoon Jolt

Boeing: "I Don't Know Where He Got the $4 Billion Figure From."

Trump's latest volatile tweet lands in Puget Sound.

By Josh Feit December 7, 2016

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Boeing spokesman Todd Blecher disputed President-elect Donald Trump's $4 billion price tag for the next Air Force One contract. "I don't know where he got the $4 billion figure," Blecher told PubliCola today. "I can't square that circle."

“Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control," Trump's latest exclamation mark twitter tantrum blared yesterday, "more than $4 billion. Cancel order!”

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Currently, Boeing has a $170 million Air Force One contract with the U.S. Air Force to come up with the initial design, engineering work, and general configuration, Blecher says, for the two 747s in the Air Force One fleet.

The next phase of the process is a separate $2.7 billion contract, which Boeing hasn't officially signed  yet, to actually build and deliver the planes, sometime around 2023, Blecher says. This jibes with the Air Force's five-year budget on the project, go to page 835; the Air Force does its budgeting five years out.

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Air Force One is a unique plane and the project isn't expected to be completed by 2021; so, costs could conceivably jump by $1.3 billion in the two years  after 2021 when the plane is expected to be completed. So, Trump's guess work isn't wild, especially when you compare to his tweet about "millions" of illegal voters.

But it's unclear why  he thinks the costs are "out of control." Politifact rated Trump's statement as only "Half-True," noting, for starters, that Boeing is actually building two planes, and more significantly that the costs are driven by unique military needs set by the Air Force not Boeing mark ups. Furthermore, the cost will be paid over several years, making it a minusclue of the annual defense budget— "four-one-hundredths of one percent," Politifact says.

U.S. Air Force spokeswoman Erika Yepsen told me, "we are still conducting risk reduction activities with Boeing to inform the engineering and manufacturing development contract negotiations that will define the capabilities and cost. We have budgeted $2.7 billion in the Fiscal Year 2017 Future Years Defense Program  [their five year budget], but expect this number to change as the program matures with the completion of the risk reduction activities."

U.S. representative Suzan DelBene (D-WA, 1), where plenty of Boeing workers live (though, the plant is in WA, 2), says: “The next generation Air Force One is still in the development phase and at this point Boeing is under contract for $170 million. It’s entirely unclear where President-elect Trump is getting his cost estimate and this kind of rhetoric will do nothing to promote manufacturing jobs in the United States.”

Boeing delivered the current set of 747 Air Force Ones during the Bush I administration in 1990. They're arguably the most "unique" planes in the world, Blecher says, because they are a "flying national command aircraft" that the president must rely on in emergencies to act as commander in chief. 

The $2.7 billion contract is certainly a big deal ("it's very important to us, and we are ready to move forward with the Air Force and President Trump" Blecher said.) But  spread over five years, it isn't a major portion of Boeing's business.

Boeing's $66 billion annual commercial airline business currently has 5,635 planes in the pipeline, of which only 29 (not including Air Force One) are 747s, an unconventionally large plane used mostly for cargo business. Most of Boeing's orders are for 737s, Boeing's classic passenger jet that carries between 85 and 200 passengers.  Overall, in 2015, when you include Boeing's defense business, which isn't limited to the DOD and the U.S., Boeing's revenues hit $96 billion. The Air Force One deal brought in $11 million that year.

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