In a tweet, the President-elect said the costs are out of control on the jumbo jet.
A single tweet by President-elect Donald Trump declaring that he wants to cancel the contract for replacement of the Air Force One presidential jets has shocked Boeing and cast doubt on what was expected to be a lucrative crowning order for the 747 jumbo jet.
“Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!” Trump tweeted early Tuesday.
In brief follow-up remarks, Trump told reporters in New York that “The plane is totally out of control. I think it’s ridiculous. I think Boeing is doing a little bit of a number.”
“We want Boeing to make a lot of money but not that much money,” he added.
On Wednesday Trump reiterated his stance, saying he’d spoken with Boeing chairman and CEO Dennis Muileburg and would work out the matter or else forgo the purchases, Bloomberg News reported.
“We’re going to get the prices down and if we don’t get the prices down, we’re not going to order them,” Trump said in a phone interview with NBC. “We’re going stick with what we have.”
The Air Force selected the latest Boeing 747-8 as the aircraft type that will replace the current 747-200-based Air Force One jets after 2021. That means Trump would fly on those aircraft as president only if he were to win a second term.
The Air Force wants either two or three heavily modified versions of the 747-8 and has budgeted more than $3 billion in development costs through 2021, with additional procurement costs that could come close to Trump’s figure. Boeing issued a statement in response to Trump’s tweet pointing out that only the first sliver of that money is under firm contract.
“We are currently under contract for $170 million to help determine the capabilities of these complex military aircraft that serve the unique requirements of the President of the United States,” Boeing said. “We look forward to working with the U.S. Air Force on subsequent phases of the program allowing us to deliver the best planes for the President at the best value for the American taxpayer.”
If Trump were to follow through and cancel the Air Force One procurement plan, it would derail the expected trajectory of the 747 program in Everett.
The recent boost of a new UPS order for 14 cargo jet versions of the 747-8 increases the program’s secure unfilled order base to about 30 aircraft. Even at the current very slow production rate of one built every other month, that would extend production out only five years.
That would keep the 747 alive beyond Trump’s four-year term. But if the contract were suspended for that long, the 747 program might be too close to its end by then, forcing the Air Force to look for another jet to fill the role in the early 2020s.
In that case, the only logical contender would be Boeing’s forthcoming 777X.
The fact is that Trump has no alternative to Boeing as an Air Force One supplier, unless he plans to make Airbus great again, or Ukraine’s Antonov. They are the only other plane makers in the world that make jets big enough.
A significant number of Boeing machinists voted for Trump, despite his hard-line stance on restricting international trade, which could hit Boeing’s foreign sales.
On Tuesday, a Boeing machinist and Trump supporter said he was “disappointed” by the president-elect’s tweet because it signaled a move that would directly hit jobs at his workplace in Everett.
“One reason we voted for him was hoping he’d bring a lot of the Boeing jobs back to the U.S.,” said the machinist, who asked not to be identified because he spoke without company permission.
“He needs to stop tweeting,” the machinist added, laughing.
Trump’s out-of-the-blue statement suggests some animosity toward Boeing.
He has criticized “corporate welfare,” a characterization he applies to the U.S. Export-Import Bank financial backing that supports many Boeing jet sales to foreign airlines. And while campaigning in South Carolina, he assailed Boeing for sending work to China.
Loren Thompson, a defense analyst with the Lexington Institute who is paid to consult for Boeing and is well-connected at the Pentagon, said it’s more likely Trump is just shooting from the hip in reaction to seeing the size of the projected bill for the airplanes.
“The real problem is the president-elect doesn’t know much about aerospace or defense, and yet he reacts viscerally to news he dislikes,” Thompson said.
Thompson said the massive expense of the Air Force One jets is necessary to defend the president and protect communications in case of an attack, including a nuclear war.
“This plane must be able to do things no other plane in the world can do,” Thompson said. “It might have to remain airborne for days during a nuclear attack and connected to U.S. military forces.”
That means the plane must be hardened against bomb blasts, be capable of refueling in flight from an Air Force tanker — a capability you won’t find on any civilian 747 passenger jet — and be able to cope with new security threats, such as cyberattacks, Thompson said.
The latest Department of Defense budget submission has set aside $347 million to upgrade the current Air Force One jets — including adding new protected satellite communications, a fuel-tank inerting system, new weather radar and digital systems — until the replacement jets Trump tweeted about are ready after 2021.
And if it’s a question of Trump perhaps sending a message to Boeing that he wants the planes at a cheaper price, Thompson said the president-elect doesn’t need to engage in haggling as if this were some real-estate deal.
“He may have overestimated how forceful he needs to be in order to secure a good deal,” Thompson said. “As president, he’ll hold all the chips.”
“But the bottom line is, Air Force One is a unique plane and its mission requirements drive the price tag,” he said.
If Thompson is right that Trump needs some educating on these requirements, there’s someone in the kitchen cabinet of wealthy corporate executives he announced last week who’s positioned to do so: former Boeing chairman and CEO Jim McNerney.
McNerney and Boeing’s current leadership alike will no doubt tread carefully: Trump has a complicated history with Boeing.
He has boasted about the joys of traveling on his Boeing 757 jet — a used airplane he bought from Paul Allen for a reported $100 million in 2010, then remodeled the interior with gold and leather finishings.
In 2013, he tweeted that he was buying Boeing stock because it was a “great company!” His financial-disclosure forms filed earlier this year show he owned between $50,001 and $100,000 in Boeing stock in 2015.
However, Trump in June sold all of his stock holdings, including those Boeing shares, spokesman Jason Miller said on a conference call Tuesday morning, according to Bloomberg News. Miller did not provide any proof of the stock sales, The Associated Press reported.
During his campaign, Trump decried the state of the economy, the national debt and the Federal Reserve’s policies keeping interest rates low, saying stock prices were artificially inflated.
“The only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down,” he said during his first debate with Democrat Hillary Clinton in September. “We are in a big, fat, ugly bubble.”
On the campaign trail, Trump hammered Boeing for opening a facility in China that would finish 737s assembled in Washington state. And he suggested a scenario that seems unconnected to any reality: that in the near future Boeing is “going to make all their planes in China. Because that’s what they do.”
Boeing has touted free trade as a way to grow the company and American jobs, with the company saying most of its commercial-airplane revenue comes from foreign customers. Trump, however, has vehemently opposed both the Export-Import Bank and trade deals like the Trans-Pacific Partnership that Boeing has promoted.
Clinton, meanwhile, had a close relationship with Boeing.
As secretary of state, she had championed the company around the globe, pushing governments to sign deals with Boeing. Then-CEO McNerney had praised her advocacy, and the International Association of Machinists and Aerospace Workers endorsed Clinton’s candidacy.
On Tuesday, local reaction to Trump’s tweet was swift.
Ray Goforth, executive director of Boeing’s white-collar union, the Society of Professional Engineering Employees in Aerospace (SPEEA), tweeted in response that “The presidential airplanes are mobile White Houses hardened to survive WWIII. They are critical to national security.”
And Washington state’s U.S. senators, Patty Murray and Maria Cantwell, along with Rep. Rick Larsen (D-Everett), released a joint statement saying that “replacing the 26-year-old Air Force One aircraft will support good-paying jobs throughout Northwest Washington and is important to ensuring the safety and security of future Presidents.”
“The President-elect’s tweet does nothing to change those basic facts,” the politicians said.
This story, originally published Dec. 6, 2016, was corrected the next day. A previous version incorrectly stated that aircraft maker Antonov is a Russian company. It’s actually Ukrainian.