Trump Squeezes Boeing for $1.4B on New Air Force One Deal

Posted March 02, 2018

The Air Force wanted to sign a fixed-price contract that would make Boeing responsible for any extra costs, instead of a contract that would make the Air Force pick up the tab.

The White House did whittle down costs by agreeing past year to buy two so-called "white tails", jets that Boeing built but never delivered. "Cancel order!" he said.

But the company's negotiators balked, bringing talks to a standstill and prompting last week's White House meeting between Trump and Muilenburg.

Gidley said in a subsequent email that the $5-billion figure was based on an older estimate from the U.S. Air Force "with a 50% assurance" and that, with new economic cost adjustments, the government cost figure would be right around or a little above $5 billion.

The deal is about $1.4 billion less than original estimates, which will cover two planes and all related upgrades specific to Air Force One.

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Major portion of the pipeline would pass through southwest Afghanistan which is major bastion of Taliban . He said he did not see just one gas line but several gas pipelines to overcome energy shortages.

White House spokesman Hogan Gidley said the president's negotiating skill had shaved "more than $1.4 billion" off the purchase price. Other modifications include electrical power upgrades and adding a medical facility, an executive space and a self-defense system.

Much of the costs for the presidential plane come from pricey and complex modifications required to turn Boeing's iconic hump-backed jets into the flying fortresses that ferry USA presidents around the world. But neither Boeing nor the White House provided any details, including the cost of the airframes, about where the savings came from. However, the final price tag is $3.9 billion. Through late previous year, cost overruns had reached about US$2.9b in pretax costs.

Trump has been pushing to get the planes airborne by 2021, in time for a possible second term, but the timing will likely depend on the U.S. Air Force. And the Air Force had already been working to reduce the cost of the program before Trump was elected. "President Trump negotiated a good deal on behalf of the American people", Boeing said in a statement.

Boeing sells military planes and NASA rockets to the USA government, and it relies on the Export-Import Bank to help finance the sale of commercial jets to airlines around the world.

Before his inauguration, then President-elect Trump met with the CEOs of Boeing and Lockheed Martin at his Mar-a-Lago resort in Florida and discussed ways to lower the cost of the planes' development.