US Air Force Finds Way to Lower Cost of Air Force One

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The U.S. Air Force and Boeing Co. (NYSE: BA) have come up with a way to lower the cost of a new fleet of Air Force One presidential jets. Instead of building new ones, the Air Force and Boeing are close to a deal on buying two 747-8s built in 2015 that have been stored in the Mojave Desert since the Russian airline for which they were intended filed for bankruptcy.

Even before he took up residence in the White House, President Donald Trump complained about the $4 billion projected cost of the planes (on Twitter, of course). A new 747-8 has a list price of $386.8 million, although they would have been sharply discounted as is standard practice in the aircraft industry.

An Air Force spokeswoman said that the parties are “working through the final stages of coordination to purchase two commercial 747-8 aircraft and expect to award a contract soon.”

The two planes were part of an order for four 747s placed in 2013 by Russian airline Transaero. Boeing had built only two of the planes by the time the airline filed for bankruptcy and was scooped up by Russia’s largest commercial airline, Aeroflot, which did not want the two planes.

Boeing has been paying storage costs for the two planes while it searched for a buyer, and that no doubt allowed the Air Force to negotiate a bargain-basement price for the aircraft. Assuming a standard discount of around 35% for the planes, the cost would be about $251 million per plane.

The Air Force is certainly paying less than that figure, although the service has no intention of revealing the final price.

The bulk of the $4 billion price tag the president cited pays for the unique electronics and hardening requirements that go into Air Force One to enable it to meet the unique mission requirements of being a mobile command center for the President of the United States.

The new Air Force One fleet is scheduled for delivery in 2024.