Military

Boeing, Air Force Push Out Tanker Schedule

courtesy of Boeing Co.

In a joint press release Friday afternoon, The Boeing Co. (NYSE: BA) and the U.S. Air Force are moving the formal production decision on the new KC-46A tanker program from June to August 2016. At the same time, the initial delivery of 18 planes to the Air Force has been pushed out as well, from August 2017 to a new date of January 2018.

This is how Boeing and the Air Force describe the issue:

Due to ongoing complexities associated with qualification and certification of the aircraft’s centerline drogue and wing-aerial refueling pod (WARP) systems, and the previously announced higher volume of change incorporation to bring the first 18 aircraft up to the certification configuration, the first tanker delivery will move from March 2017 to August 2017 with the 18th aircraft delivered in January 2018.

The underlying production system remains on track, and Boeing will have more than 18 aircraft through the factory line and in various stages of final change incorporation and certification by August 2017. The first 18 aircraft will be equipped with refueling boom and centerline drogue refueling capabilities as well as all other contract required capability except WARPs. The WARP systems required to complete full contractual RAA will be delivered separately in October 2018.

Boeing said it has 5 tankers in testing, including the first production aircraft with 7 more in final production and 8 in the supply chain. The company is supposed to deliver 4 test planes to the Air Force by the end of this month, and it is not clear from the announcement whether or not the tankers already in testing meet that requirement.

Back in April the Government Accountability Office(GAO) warned that there were 4 months of schedule risk with planned delivery of 18 planes by August 2017, and that has proven to be the case.

There is also no indication in the announcement of how this delay will affect Boeing’s second-quarter earnings. The company has already taken pre-tax charges of $1.2 billion on the tanker program.

Shares traded down about 0.1% Friday afternoon at $129.21 in a 52-week range of $102.10 to $150.59.

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