Boeing CEO David Calhoun on Wednesday revealed that the aerospace company received a massive $1.1 billion from its Air Force One deal with former United States President Donald Trump.
Calhoun said he regretted the agreement and should not have accepted it, saying it was a one-off that he hoped would not be repeated. "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. But we are where we are," he said.
Boeing's $1.1 Billion Loss
The aerospace company made the deal with the Trump administration in 2018 after the Republican businessman criticized the program's costs. The former president wrote "Cancel order!" and continued his tough rhetoric on China that risked consequences for Boeing and many other U.S. exporters.
The Boeing CEO spoke during the company's quarterly earnings call where he promised investors a "very different philosophy" to fixing in advance the price for military projects. The company agreed to a fixed $3.9 billion price tag with the Trump administration but later encountered issues and higher costs that threatened to delay delivery of the two 747 jets until the end of 2026, as per CNN.
Calhoun associated $660 million of the losses with delays and higher costs for the Air Force One program. In a securities filing, the aerospace company said that risks remain that they may be required to record additional losses in future periods within the program.
The deal requires Boeing, not the federal government, to eat any overruns in the cost of modifying the two Boeing 747 jets. Under the fixed-price contract, the aerospace company was set to deliver the two planes in 2024. However, a recent Air Force budget proposal from earlier this month suggested that the delivery will not be expected until 2026.
According to CNBC, at the time the deal was agreed to, Trump bragged about it, saying, "Boeing gave us a good deal. And we were able to take that." The aerospace company spoke favorably about the deal four years ago. In February 2018, the company posted on Twitter saying that it was proud to bear the responsibility of building the next generation of Air Force One and provide American presidents with a flying White House.
Trump's Air Force One Deal
A Boeing spokesperson said that CEO Calhoun's remarks on Wednesday referred specifically to problems with fixed-price contracts in general. The official refused to answer questions that asked whether or not the CEO was directly blaming former President Trump. He said that Calhoun's comments spoke for themselves.
The deal was made under then-CEO Dennis Muilenburg before Calhoun took over in January 2020 due to his predecessor's retirement. The managing director at AeroDynamic Advisory, Richard Aboulafia, said that Calhoun should not be blaming Trump for Boeing's current predicament.
He said that there was absolutely no evidence or indication that Trump's Air Force One maneuver is the cause of Boeing's problems. Aboulafia noted that the budget for the program has remained the same and argued that blaming the former administration was done to make the situation less of a fault of the aerospace company, Politico reported.
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