Trump Vows To 'Negotiate' Price Of Boeing's New Air Force One

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Donald Trump vowed early Dec. 7 to "negotiate" the price of Boeing's new Air Force One, pledging to cancel the order if costs don't come down. 

Trump spoke with Boeing President and CEO Dennis Muilenburg by phone Dec. 6 just hours after tweeting that the U.S. Air Force should cancel the planned replacement for Air Force One, rattling not just Boeing but the entire aerospace and defense industry. The next morning Trump praised Muilenburg, calling him a "terrific guy" and saying the two will "work it out," but doubled down on his promise to cancel the order if he can't get a better price. 

"That's what I'm here for, I'm going to negotiate prices," Trump told Matt Lauer Dec. 7 on the Today Show. "The planes are too expensive and we're going to get the prices down and if we don't get the prices down, we're not going to order them and we’re going to stay with what we have."  

It's important to note that Boeing does not actually have a production contract for the new Air Force One. The Air Force has estimated it will spend $2.87 billion in research and develop funds through fiscal 2021 on the project, and the Government Accountability Office projects the total cost will be $3.2 billion. But right now Boeing is on contract for just $170 million for risk reduction and other preliminary work, meaning that the Trump administration could cut its losses with minimal cost to the taxpayer, and without penalties for breaking a massive development contract. 

Trump could choose to simply change the requirements, perhaps settling on a smaller airframe with fewer specialized systems onboard to get a lower price. As requirements stand today, however, a heavily-modified Boeing 747-8 widebody is the only airframe that fits the bill. Boeing will work with the new administration to control costs on Air Force One as they establish requirements for the program, a company official told Aviation Week. 

As I wrote Dec. 6, cancelling the new Presidential Aircraft Replacement program would be bad news for Boeing, as the company is already struggling to maintain production of the iconic 747-8 widebody. Boeing is in the midst of design and development of at least two new aircraft to replace the current VC-25A aircraft that currently ferry the President around the world, a project that the Government  Accountability Office has estimated will cost $3.2 billion overall. 

Trump tweeted early Dec. 6 that costs on the new Air Force One are "out of control" at more than $4 billion. Speaking to reporters at Trump tower after the tweet, Trump said he thinks “it’s ridiculous” that Boeing’s new Air Force One is so expensive.

“I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money but not that much,” Trump said.

Trump denied during the interview with Lauer that his original condemnation of Boeing's Air Force One had anything to do with the CEO's comments in a Dec. 6 Chicago Tribune article criticizing Trump's trade policies. Trump had not seen the article, he told Lauer. 

 

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