Military

Latest Boeing Tanker Snafu Crimps Schedule Even More

Boeing KC-46A with chicks
The Boeing Co.
Four months ago the Government Accountability Office questioned the likelihood that The Boeing Co. (NYSE: BA) would be be able to perform enough testing on its KC-46A refueling tanker in time to meet the first scheduled delivery to the U.S. Air Force of 18 planes by August of 2017. That likelihood took another downgrade on Monday when Boeing said the first test flight of the plane and its new refueling system will be delayed until late September or early October.

The latest delay follows a late July snafu in which mislabeled chemicals were added to the plane’s refueling system during a test procedure and damaged the system. A Boeing spokesman told the Everett (Washington) Herald that the affected parts were flushed and the company’s engineers determined that some parts needed to be refurbished or replaced. The company is making the repairs now.

The KC-46A has not yet completed a test flight. The platform on which the tanker is being built is the 767-2C, a version of Boeing’s 767 commercial jet. The 767-2C completed its first flight in February of this year, some 8 months late, and flew another test as recently as last Sunday.

But the Air Force is buying a tanker, not a converted freighter, and, the GAO said that the new tanker has to demonstrate that it can perform as promised even before low-rate production is approved. Anticipating that approval, Boeing has reportedly already begun to produce the first 18 planes scheduled for delivery two years from now.

The first major problem with the development of the plane occurred last summer when a faulty wiring bundle had to be replaced. Boeing took a pre-tax charge of $272 million at the time. Last quarter the company wrote down $835 million on top of that.

Under the terms of Boeing’s contract with the Air Force, program development costs are capped at $4.9 billion. Any amounts over that figure are Boeing’s responsibility.

Boeing recently shook-up the management of the tanker program, bringing in an executive who was responsible for getting the even-more-troubled 787 out the door. Scott Fancher’s new job is to get the tanker program back on track and meet the progress deadlines that Boeing agreed to.

The company’s stock closed Monday down about 0.5% at $144.44 in a 52-week range of $116.32 to $158.83. The first report of the latest delay did not hit the wires until after the market closed.

ALSO READ: The Largest Company in Each State

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Get started right here.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.