Boeing Faces Delivery Challenge on Air Force Tanker Program

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The new U.S. Air Force refueling tanker Boeing Co. (NYSE: BA) is building has run into another problem that threatens the company’s ability to meet its delivery schedule of 18 of the planes by August 2018. The Air Force discovered in May that during testing in 2016, the KC-46A’s refueling boom had on a number of occasions scraped the surface of the aircraft being refueled.

Worse, the new tanker failed to detect that its boom was not connecting with the receptacle on the plane being refueled. This lack of communication makes it impossible for the tanker’s pilot to inform the plane being refueled that it may have suffered some damage.

According to Defense News, the Air Force is conducting a root-cause analysis to determine what is causing the problem and review historical data on current tankers to see how often this problem has surfaced in the past. Based on initial data, service officials say this undetected contact is happening more often than in the legacy fleet.

According to Air Force officials, they still believe that Boeing can correct this deficiency, as well as two others that have also been reported, in time to meet a late spring 2018 delivery date for the first KC-46A.

Under Boeing’s contract with the Air Force, the company must deliver 18 tankers by October. If Boeing can deliver the planes by that date, the Air Force then determines if the planes meet the contract specifications. If they do and the service still requires modifications, the Air Force will pay for the work. If the planes don’t meet spec, Boeing pays for the fixes.

Boeing’s contract calls for a total of 179 KC-46A tankers to replace the current Air Force fleet of KC-135 tankers. Boeing has had to swallow more than $2 billion in costs to date on a contract valued at $35 billion. Including spare parts and other services the total value of the contract could exceed $100 billion over the life of the KC-46A.