Boeing 'probably shouldn't have taken' Trump-negotiated Air Force One deal, CEO says

By Gregory Wallace, CNN

    (CNN) -- Boeing's CEO on Wednesday called the unusual deal his predecessor negotiated with then-President Donald Trump for the next generation of Air Force One a one-off that he hopes not to repeat.

"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," CEO David Calhoun said. "But we are where we are."

Boeing made the deal in 2018 after Trump publicly criticized the program's costs, writing "Cancel order!" and amid Trump's tough rhetoric on China that risked consequences for Boeing and other US exporters.

Calhoun spoke on the company's quarterly earnings call and promised investors "a very different philosophy" to fixing in advance the price for military projects.

Boeing agreed to a fixed $3.9 billion price tag but has since encountered issues and higher costs that threaten to delay delivery of the two 747 jets until the end of 2026, approximately two years later than Boeing promised.

Earlier this month, the Air Force attributed the delay to a "combination of factors including impacts from the Covid-19 pandemic, interiors supplier transition, manpower limitations, wiring design timelines and test execution rates." Boeing declined at the time to comment on the delay.

Calhoun said the coronavirus pandemic complicated work because only a limited number of workers have the high-level security clearances necessary to work on the project.

"When a Covid line goes down or a group of workers steps out, we don't have a whole bunch of cleared people to step into their shoes," he said.

"For VC-25B where the clearances are ultra-high, it's really tough," he continued, using the military model number to describe the jets.

The former President, with his deal-making persona, took an unusually hands-on approach to the Air Force One deal. He personally met with Boeing big-wigs at the White House to seal the deal. He also shared drawings for a new red, white and blue color scheme for the jets.

Other factors complicated the Trump-Boeing relationship. The company faced business pressure from his sharp criticism of China. Following a pair of deadly crashes, the President personally announced the grounding of Boeing's 737 MAX jet -- a matter typically handled by the Federal Aviation Administration. And his acting defense secretary, who ultimately withdrew from consideration for the permanent job after allegations of domestic violence surfaced, was a former Boeing executive.

The-CNN-Wire
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