Boeing warns of delays, cost overruns on VC-25B programme

Boeing (BOE, Chicago O’Hare) has warned the United States Air Force about a likely delay of up to 12 months concerning the delivery of the two B747-8(VC-25B) VIP transports and has formally asked to renegotiate the contract’s price tag, an official said during a congressional hearing. Acting Assistant Secretary of the Air Force (Acquisition, Technology & Logistics) Darlene Costello said during a hearing of the House Armed Services Committee that the USAF was currently undertaking a schedule risk assessment and had yet to agree to the revised timeline. Under the original timeline, the two aircraft were due to deliver to the USAF by the end of 2024, shortly before the end of the current term of President Joe Biden. A delay would mean the aircraft would enter into service under the next administration. Boeing said the delay was caused by the impact of the COVID-19 pandemic on the one hand, and the recent bankruptcy of GDC Technics, the supplier that was contracted to outfit the aircraft’s interiors, on the other. Boeing and GDC Technics are currently involved in a legal battle with both sides suing the other in relation to the VC-25B programme. Costello said that she does not expect any delays exceeding the 12-month period indicated by Boeing. The manufacturer also asked the United States Department of Defence for an “equitable adjustment” of the price tag for the contract. Costello did not disclose any details concerning the scale of the adjustment’s value. The original contract, covering the acquisition and extensive modification of the two B747s, was priced at USD3.9 billion, although together with other costs, such as the construction of necessary ground infrastructure, the DOD plans to spend up to USD5.3 billion on the programme. “We continue to make steady progress on these programs and are working closely with the US Air Force,” Boeing told Reuters. The two aircraft, N894BA (msn 42416) and N895BA (msn 42417), were originally built for Russia’s Transaero Airlines in 2016, although they were not delivered due to the bankruptcy of the carrier. Subsequently, Boeing and the US government agreed to convert the aircraft into VIP transports, dubbed VC-25Bs, to replace the two ageing B747-200(VC-25A)s, which are now almost 34 years old on average. The transaction was promoted as a lower-cost alternative to ordering brand new aircraft which would have had to be built from scratch.