Supplier dispute threatens Boeing’s VC-25B deliveries

An ongoing legal dispute with a key cabin interior supplier is threatening the completion of two new VIP B747-8s for the United States Air Force in time for their scheduled deliveries by December 2024, FOX Business has reported. In early April, Boeing terminated its contract with GDC Technics, citing insufficient personnel to deliver the customised interiors in time. “As a result of GDC’s failures, GDC missed numerous deadlines and delivery dates, caused myriad disruptions to the VC-25B program, and made insufficient progress on the aircraft interior work that it was required to perform… GDC’s failures have resulted in millions of dollars in damages to Boeing and threaten to jeopardize work that is of critical importance to the USAF and the President of the United States,” the manufacturer said in court papers. However, later in April, the Texas-based supplier counter-sued, alleging that Boeing caused the delays. “Because of its problems with engineering, program management, and its own financial difficulties, Boeing has fallen behind in the project schedule for the aircraft. Boeing looked to GDC as a scapegoat to excuse its lack of performance on the aircraft to the United States Air Force,” the supplier said. After Boeing said it would switch work originally contracted to GDC Technics to other entities owned by Boeing or the US government, the Texan supplier notified state authorities that it would lay off 176 staff members at its facilities in San Antonio and Fort Worth. It subsequently filed for Chapter 11 restructuring at the US Bankruptcy Court for the Western District of Texas on April 26, 2021. GDC Technics is owned by Saudi Arabia-based MAZ Aviation and investment firms Trive Capital and Oriole Capital Group. It has a contract with Boeing to maintain the current fleet of presidential B747s operated by the US Air Force. Also, it outfits VIP aircraft for other customers, including foreign governments. In its quarterly financial report for the first quarter of 2021, Boeing revealed a USD318 million pre-tax charge on the VC-25B programme related to “COVID-19 impacts and performance issues at a key supplier”. The manufacturer maintains that it will meet the 2024 deadline for delivering the two jets, although the US Air Force is said to be re-evaluating that timeline. N894BA (msn 42416) and N895BA (msn 42417) were both built in 2016 for Transaero Airlines (UN, Moscow Vnukovo) but never delivered to the defunct Russian carrier. They are currently undergoing conversion and outfitting to US Air Force specifications at San Antonio Lackland airport. They will replace the current presidential B747 fleet, which comprises two B747-200(VC-25A)s built in 1987. The contract for the new VC-25Bs was signed in 2018 by the Trump administration at an estimated cost of USD3.9 billion.