Boeing CEO Dave Calhoun told investors Wednesday that the company probably shouldn't have agreed to a fixed-price contract with former president — and "Art of the Deal" author — Donald Trump to develop a new Air Force One fleet.
The company has already lost $660 million developing the two 747 jets for the fleet following a 2018 deal Trump made with the company that makes Boeing foot the bill for all cost changes in the development process. The new fleet was originally supposed to make its entrance in 2024, but as CBS News has reported, Boeing has projected the planes could be 17 months behind schedule. The deal was made under a different CEO — Calhoun took the helm at Boeing in January 2020, but he was on the board when the deal was made.
Calhoun told investors during a first quarter performance review call the company "probably shouldn't have taken" the $3.9 billion fixed-price contract, but called the situation unique and said they'll still deliver great planes. The fixed-price agreement means that Boeing is not able to charge the government for any cost overages that may occur for any reason.
"Air Force One, I'm just going to call a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn't have taken, but we are where we are, and we're going to deliver great airplanes. And we're going to recognize the costs associated with it," Calhoun said.
The company says the higher costs were driven primarily by higher supplier costs, higher prices to finalize technical requirements, and schedule delays. Pandemic-related supply chain issues have plagued the globe the last two years.
In December 2016, Trump tweeted that costs for the program were "out of control, more than $4 billion," adding, "Cancel order!" After that, Boeing's then-chief executive Dennis Muilenburg met multiple times with Trump to discuss the Air Force One contract.
At the time of the agreement in 2018, the Trump White House said the agreement would save taxpayers up to $1.4 billion.
The first plane officially called Air Force One carried President Dwight Eisenhower in 1959, but it was President John F. Kennedy who brought the plane into the jet age.
On Tuesday, White House press secretary Jen Psaki said she didn't have any more details about the Boeing delays.
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