Boeing Co. (NYSE: BA) shares saw a handy gain on Tuesday after the company announced that it had reached a deal with the U.S. president for two new Air Force One planes.
According to a White House spokesman, this fixed price contract is expected to save taxpayers over $1.4 billion. The actual deal is pegged around $3.9 billion.
An interesting sidenote of this deal is that these two planes originally were to be sold to Russia, which appears to be where the cost savings are coming from. The U.S. Air Force noted that after the deal fell through with Russia, the Air Force acquired these aircraft at a discounted rate. The U.S. Air Force also was quick to point out that these planes never left U.S. soil.
As for the actual deal, it includes the two new planes and their development program, as well as the construction of a new hangar to house the aircraft.
It’s worth pointing out that the aircraft only account for roughly one-fifth of the cost. Most of the cost in this deal comes from outfitting the planes for the president, including ensuring communication equipment is secure and the plane is self-sufficient.
Shares of Boeing were last seen up 1% at $367.52 on Tuesday, with a consensus analyst price target of $386.78 and a 52-week range of $173.75 to $369.15.