Boeing reveals big losses on Trump Air Force One deal

Business

Air Force One with President Joe Biden arrives at Portland International Airport in Portland, Ore., Thursday, April 21, 2022. (AP Photo/Craig Mitchelldyer)

(NewsNation) — Boeing is just the latest government contractor to send a bill much larger than its original estimate.

Boeing said Wednesday that it lost $1.2 billion in the first quarter as it took large write-downs and lost money in both its civilian airplane and defense businesses.

But the most notable loss was on Air Force One.

Boeing lost $660 million by agreeing to former President Donald Trump’s deal for new Air Force One jets, an endeavor to which its CEO David Calhoun says the company “probably shouldn’t” have agreed.

“That plane, as beautiful as it looks, is 30 years old,” Trump joked. “Can you believe it? What can look so beautiful at 30 — an airplane?”

The estimated cost for the planes is about one-third more than the $3.9 billion dollars negotiated by Trump.

Calhoun blames the loss on the two specially modified jets, higher supply costs and schedule delays.

“They took a hit. Without a doubt, we had Air Force One, which is a program most people know a lot about. It took a hit,” Calhoun said.

Grossly miscalculated bids are not uncommon with government contracts.

In California, the much-hyped high-speed rail, with a $3 billion price tag ended up costing $10 billion so far.

In 2013, the healthcare.gov website, with an estimated cost of $464 million, ended up costing $824 million.

And the promised $17 billion International Space Station quadrupled to $74 billion.

In these cases, and in Boeing’s, who winds up paying the difference?

“Boeing shareholders will eat some of it,” economist Dr. Stan Smith said. “And government taxpayers will eat some of it.”

Smith says hindsight is 20-20.

“I think they have a responsibility to submit a bid in good faith,” he said. “But sometimes, there’s things that are just unanticipated, and COVID is an unanticipated event.”

Aside from the pandemic, Boeing says inflation is hurting its fixed-cost contracts and that the war in Ukraine and sanctions have contributed losses in its revenue.

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