One could be forgiven for thinking that Boeing Co. (NYSE: BA) and the U.S. Air Force would have agreed long ago on a date for first deliveries of the new KC-46A refueling tanker. After all, the contract was awarded in 2011 and delivery of the first 18 new tankers was scheduled for August of last year.
That date has come and gone, and the company and the Air Force have been wrangling ever since about issues and deliveries. Finally, on Wednesday, the parties have agreed that the first tanker will be delivered in October 2018. The remaining 17 planes will be delivered over the next six months.
Boeing signed fixed-price contract to provide 18 new tankers for $3.5 billion. So far the company has racked up more than $3 billion in pretax charges that it has had to write down. Boeing probably will be as happy as the Air Force when these birds fly the coop.
Air Force Undersecretary Matt Donovan commented:
As a result of months of collaboration, the Air Force and Boeing KC-46A teams have reached an agreed joint program schedule to get to the first 18 aircraft deliveries. This includes the expectation the first KC-46A aircraft acceptance and delivery will occur in October 2018, with the remaining 17 aircraft delivered by April 2019. While the KC-46A flight test program is nearly complete, significant work remains. The Air Force is looking forward to KC-46A first delivery and will continue to work with Boeing on opportunities to expedite the program.
Boeing reportedly has more than 36 of the planes in some stage of production. The final issues that need to be addressed are related to the refueling boom. First, when the boom is detached from the plane being refueled it can scrape against the refueled aircraft, scratching the plane’s body. That’s not a problem unless the plane is stealthy, in which case the scrape could cause enough damage to make the aircraft vulnerable to radar detection.
The second issue is the tanker’s remote vision system that guides the refueling boom to the receiving aircraft. Under certain conditions, the operator’s view is obstructed. Boeing says it is testing a software fix for this issue.
The October delivery date gives Boeing time to remedy these issues and, while the Air Force is not exactly happy with the delay, it is willing to accept the delay if it means that the first delivery will meet operational requirements.
24/7 Wall St.Leanne Caret, president of Boeing’s defense division, noted:
I do think though that when you have a tough program like this it’s easy for relationships to get strained over time. Especially one that goes on for as many years as this has. That’s not atypical for Boeing or any other contractor, they’re just hard.
A prediction: Boeing will figure out a way to deliver the first KC-46A ahead of schedule and declare victory far and wide.
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