One new, custom-built Boeing 767. Never flown. Needs engines. Asking $54 million ... or best offer. Anyone in the market for a large, leftover...
One new, custom-built Boeing 767. Never flown. Needs engines. Asking $54 million … or best offer.
Anyone in the market for a large, leftover airplane?
Built as a prototype for the lucrative but ill-fated Air Force tanker contract, the plane has sat mothballed in Boeing’s Everett factory for the past year. Now the company is close to a decision on how to dispose of this not-ready-to-fly white elephant.
Boeing Commercial Airplanes is considering scrapping the airplane.
Or the company may donate it to a flight museum.
In the best-case scenario, it may sell the airplane for a song to the company’s military division. But defense-side engineers are still considering whether they want it.
If it recoups the scrap value, Boeing’s net loss on building this 767 will be $54 million. Development expenses incurred in producing the prototype bring the total loss to $275 million, according to its latest annual report.
Boeing considers the jet obsolete, because if the air-refueling tanker deal is resurrected, the company will offer a different, cheaper version of the airplane.
Unlike a conventional commercial 767, this one has strengthened floors, upgraded electrical systems and an added cargo door. That makes it a one-of-a-kind plane, lacking FAA certification to fly.
Boeing’s dilemma is that it would cost more to complete the airplane, certify it and deliver it than a 767 could fetch on the market.
A detailed commercial-airplane division study of the costs of each of the options — scrap, donate or sell at a discount to the defense unit — was due to be completed this month, according to an internal Boeing document obtained by The Seattle Times.
The last option might seem the most logical. The defense unit has orders for four 767 air-refueling tankers for the Italian Air Force and three more for the Japanese Air Force. Only one, now in Italy, has been finished.
But those airplanes have various differences. Larry Whitley, Boeing’s spokesman on the tanker program, said defense-unit engineers are still studying the leftover jet and deciding “if it makes sense to do anything with it.”
Whitley said a decision is probable by the end of next month.
Even donating the airplane won’t be straightforward.
Craig O’Neill, spokesman for the Museum of Flight, said the museum turned down an earlier offer from Boeing to accept the first 767 ever built. Aside from space constraints — the jet is as wide as a football field and more than half as long — the museum was wary of the considerable costs of looking after a large aircraft on display outdoors.
“It’s difficult for me to imagine how we could take advantage of such an offer, much as we might like to,” O’Neill said.
In 2001, Boeing was so confident of the original $23.5 billion deal to lease 100 air-refueling tankers to the Air Force that it funded initial development with its own money.
The tanker deal drew fire early on from Sen. John McCain, R-Ariz., for its alleged excessive cost to the taxpayer and lack of congressional oversight. Then in April 2004 Air Force procurement officer Darleen Druyun admitted in court that she had sweetened deals for Boeing. The tanker deal — which she had worked on — was killed.
Boeing suspended work on the prototype airplane at once. In January, the company announced an accounting charge to cover its full loss on the leftover jet.
The Pentagon is expected to reopen the tanker competition after the completion, scheduled for mid-August, of a Pentagon analysis of alternatives.
Boeing then may have to compete for the contract against Europe’s EADS, parent company of Airbus, which plans to offer an Airbus jet that would be modified at a new plant in Charleston, S.C.
To reduce the cost to the Air Force, Boeing’s new proposal envisions that mechanics will modify the commercial jets into military tankers on the production line in Everett. That would require turning it into an all-military line, complying with federal rules barring non-U.S. citizens from working on or visiting the production area.
Meanwhile, in the next bay over from the obsolete tanker in the huge Everett assembly building, Boeing continues to produce commercial 767s.
The current order backlog, after three new orders came in this month, is 21 jets. The program can keep going only if Boeing wins a new Air Force tanker deal before it has to close the line.
Boeing executives have said that they will decide by the end of the summer. If a deal is deemed unlikely or too far off, Boeing will close the line at the end of 2006.
There may not be many chances left to own a 767.
Dominic Gates: 206-464-2963 or firstname.lastname@example.org