Aerospace giant Boeing reported on Wednesday almost $500 million in additional losses in its program to develop two new plans for the president of the United States. This program has already recorded hundreds of millions in losses in recent years.
In its third-quarter earnings report, Boeing notes a loss of $482 million during the period on its VC-25B Air Force One program. The company’s defense business – called Boeing Defense, Space and Security – lost 924 million dollars in total during the quarter, according to the report.
Third-quarter Defense, Space and Security revenue was $5.5 billion. Third quarter operating margin was 16.9%, due to a $482 million loss on the VC-25B program driven by increased estimated manufacturing costs related to engineering changes and labor instability, as well as the resolution of negotiations with suppliers,” Boeing said in a statement.
The VC-25B is a military version of Boeing’s 747-8 commercial airliner. For the past several years, the company has been working to retrofit two aircraft as replacements for the current Air Force One when they retire at the end of this decade. The Air Force recently said the first new Air Force One is expected to begin flying with the president in 2027, and the second plan in 2028.
Combined with previous program cost overruns, the third quarter losses increased the overall losses from VC-25B development to more than $1 billion since 2020.
“We are focused on driving stability in our supply chain and improving operational performance as we steadily increase production rates to meet strong demand,” Boeing CEO and Chairman David Calhoun said Wednesday. “By leading with safety, quality and transparency, we will continue to restore our operational and financial strength.”
Although the new plans will feature top-secret aeronautical and defense technology that neither the military nor Boeing can discuss publicly, President Joe Biden announced this year that there would be slight changes to the plans’ livery design. The blue will be “slightly deeper” and more “modern” than the shade of the current presidential plans, and there will be no polished metal sections on the aircraft. Another slight change is that the blue paint around the engines will be darker.
Last year, Calhoun told investors it was probably a mistake for Boeing to sign the $3.9 billion fixed-price contract it negotiated with then-President Donald Trump in 2018 to produce the new plans. Under that agreement, it is up to Boeing to take responsibility for unforeseen risks, such as cost overruns.
Doug G. Ware