Air Force One delay is latest setback for Boeing

Air Force One is a recognisable symbol of American power, but the prestige the presidential plane generates for its manufacturer Boeing is diminishing amid a legal spat in Texas and the prospect of delay and higher costs for US taxpayers.

Boeing has told the US Air Force it expects a year-long delay to deliver the pair of retrofitted 747-8 aircraft. Each tri-level jet will be enhanced with a presidential office, a medical suite that can serve as an operating room and two galleys to feed up to 100 passengers.

Boeing also has asked the air force for more money. The contract to remake the planes sits at $3.9bn, down from $5bn after former president Donald Trump attacked the higher figure as “ridiculous”.

Meanwhile, Boeing and the bankrupt supplier GDC Technics are suing each other in a San Antonio, Texas court over who is to blame for the delay.

It’s one on top of another, on top of another. That’s the issue, not Air Force One per se. It’s yet another fumble 

The programme represents a sliver of Boeing’s top-line, which totalled $58bn in 2020. Yet it concerns some analysts because it is another black eye in a string of problems ranging from minor to catastrophic: debris left in the USAF’s KC-46 refuelling tankers, the Starliner crew capsule that failed to reach the International Space Station, the halted 787 deliveries and the two crashes of the 737 Max that killed a combined 346 people.

The Air Force One problems contribute “to an overall impression of Boeing having serious programme management and execution deficiencies, both in their commercial and military businesses”, said Teal analyst Richard Aboulafia.

“It’s one on top of another, on top of another,” added Bank of America analyst Ron Epstein. “That’s the issue, not Air Force One per se. It’s yet another fumble . . . It really makes you question what’s going on in their engineering organisation.”

A Boeing spokeswoman said the company has brought together 50,000 engineers into a single function within the company to unify responsibility for safety, and appointed a chief aerospace safety officer in January. She added the KC-46 has flown more than 4,000 flights for the air force so far, Nasa and Boeing have successfully tested the Starliner’s software for a second attempt to reach the ISS and the Max is drawing orders.

While prestige projects seldom rack up profit, they do burnish a company’s reputation. The Air Force One call sign technically can apply to any plane carrying the US president, but since the 1960s it has referred to a specially outfitted jet, emblazoned with the presidential seal and American flag.

The two Boeing 747-200B jets that transport President Joe Biden have 4,000 square feet of space, can refuel in mid-air and have hardened onboard electronics to protect against disruption by electromagnetic pulse. The communications equipment is built so that the aircraft can function as a mobile command centre if the US is attacked.

The first of the current Air Force One jets entered service in 1990. The replacement planes are 747-8s that now-defunct Russian airline Transaero defaulted on that were sitting at an aeroplane “boneyard” in the Mojave desert. They are being refurbished in San Antonio, Texas.

Boeing contracted with GDC to design and build new interiors for the jets, as well as to do maintenance work on the current Air Force One planes. (The programmes are known as VC-25B and VC-25A, respectively.) On April 7, Boeing sued GDC in a state court, saying the contractor had fallen behind on the production schedule, failed to meet design specifications and, despite financial assistance from Boeing, lacked sufficient cash to pay other suppliers and employees.

“GDC’s precarious condition continues to put Boeing’s commitments to the [US Air Force] customer on both VC-25A and VC-25B at risk,” the lawsuit said. “Boeing was thus left with no choice but to cancel the VC-25B and VC-25A subcontracts.”

The company’s “failures have resulted in millions of dollars of damages”, Boeing said, and it demanded that GDC return parts, tools, drawings, raw materials and subcontractor contracts. The list of items the aerospace manufacturer wants back stretches 11 pages and includes 25 gallons of “Spa White” paint.

GDC countersued nine days later. In its lawsuit, the company said that while Boeing claimed it was terminating the contract because of GDC’s insolvency, the manufacturer “failed to inform the United States Air Force that GDC’s financial issues were substantially caused by Boeing’s breaches of its contracts with GDC”.

The supplier’s financial stress stems from Boeing owing more than $20m in payments, the GDC lawsuit said. It said the company was willing to return the materials after Boeing paid, but that the manufacturer had refused.

GDC’s lawsuit also said that Boeing mismanaged the Air Force One programme. It said GDC notified the Chicago-based company before Boeing sued that the “VC-25B programme as a whole has not been tracking to the contractual schedule for over 18 months, and GDC is currently waiting for a revised schedule from Boeing. GDC cannot be obligated to adhere to a schedule that it does not have.”

“Because of its problems with engineering, programme management and its own financial difficulties, Boeing has fallen behind in the project schedule for the aircraft,” the lawsuit said. “Boeing looked to GDC as a scapegoat.”

GDC filed for Chapter 11 bankruptcy protection on April 26 and dismissed 223 employees.