Production Decision on Boeing's Troubled KC-4
Production Decision on Boeing's Troubled KC-46 Tanker Expected Soon
IBD/GILLIAN RICH
WASHINGTON, D.C. -- The Air Force is still on track to hold a formal decision-making meeting over the Boeing (BA) KC-46 tanker later this month.
At the State of the Air Force hearing Wednesday, Air Force Secretary Deborah James said a meeting with top Pentagon procurement officer Frank Kendall will take place later this month to approve production of the KC-46 tanker, known as Milestone C.
"We believe that aircraft has meet all the wickets that are required to meet Milestone C, but of course it remains to be seen, so I'll say stay tuned for that," she said.
The meeting was originally scheduled for June, but Boeing said in a May statement that it was delayed so the company would have "additional time to implement the solution to a refueling boom loads issue identified during flight testing earlier this year."
Boeing took a $393 million after-tax charge on the KC-46 in the second quarter due to higher costs to work on technical issues that put the plane behind schedule.
Boeing also reported a charge on the tanker in Q1 and has racked up $1.5 billion in cost overruns on additional engineering and development work.
At the hearing, James also outlined incentives to retain pilots, as U.S. commercial airlines likeUnited Airlines (UAL), American Airlines (AAL) and Delta Air Lines (DAL) are on a hiring spree to replace retiring pilots. The Air Force is expected to face a shortfall of 1,000 pilots by the end of the year.
Last month, Boeing projected that airlines would need 617,000 pilots the next 20 years, up 11% from its forecast in 2015. U.S. carriers are expected to hire 20,000 pilots over the next decade.