09 Dec A Fair Look At Trump’s Threat To Boeing
Boeing investors went into a tailspin after President-Elect Donald Trump threatened to cancel the order for the SAM (Special Air Mission) aircraft with Boeing.
Boeing tweeted the following about the Air Force One Program:
Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!
— Donald J. Trump (@realDonaldTrump) December 6, 2016
In the Trump Tower he told media:
The plane is totally out of control. It’s going to be over $4B dollars for [the] Air Force One program and I think it is ridiculous. I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money, but not that much money.
AeroAnalysis published an article on Seeking Alpha with an indepth factual look on Trump’s words.
The main conclusions and observations from AeroAnalysis are:
- Boeing is currently not building a new Air Force One aircraft, the company in fact is under a $170 million contract to explore the capabilities of the aircraft.
- No firm order has been placed; The Boeing 747-8I is the only aircraft that has remained after a thorough aircraft selection procedure. The only other option would be the Airbus A380, but the European jet makeri is unprepared to offer its A380 base model for modification.
- The figure currently budgeted by the Department of Defense (DoD) is $2.87B. Roughly a billion in additional costs needs to be added to acount for the last year of the program.
- The previous program, inflation adjusted, has also had a budget of roughly $4B
- $4B is not excessive for system development, airframe procurement and modification process.