The Blubber

Boeing, $BA, has now lost more than $1 billion on each of the president’s two new jets, per CNN.

On Wednesday, Boeing disclosed another $482 million in losses related to the contract for retrofitting two 747 jets into the next generation of the presidential plane, bringing the total losses on each of these two planes to over $1 billion.

The company has been reporting losses on this project for several years. CEO Dave Calhoun admitted last year that Boeing never should have signed the contract with the Air Force for $3.9 billion. Supplier costs have surged, and delivery dates have been continuously delayed. In 2021, Boeing reported losses of $1.45 billion on the project, and $318 million in 2021.

Discussing $660 million of those losses reported at that time, Calhoun called Air Force One a "very unique moment" with unique risks that Boeing shouldn't have undertaken. The recent loss was attributed to engineering changes, labor instability, and resolving negotiations with a supplier.

While higher costs on defense contracts are often passed on to U.S. taxpayers, Boeing agreed to a fixed-price contract for the two new presidential jets under pressure from then-President Donald Trump, who had threatened to cancel the project. In a fixed-price environment, unexpected obstacles can introduce unrecoverable costs, according to Calhoun. Boeing remains committed to delivering two exceptional airplanes for the customer.

Technically, the program is designated as the VC-25B, as the "Air Force One" title is reserved for when the president is aboard any U.S. Air Force-operated aircraft, not during construction or when it is grounded.

The recent losses on the Air Force One project represent only a portion of the losses reported by Boeing, which has experienced losses in nearly every quarter since early 2019. The company's total losses now amount to $25.5 billion, dating back to the grounding of its 737 Max jet for 20 months starting in March 2019, following two fatal crashes that claimed 346 lives.