Air Force One Costs Jump by a Third to $5.3 Billion
The fiscal year 2020 Department of Defense budget request includes a more detailed accounting of the costs for the new Air Force One presidential aircraft program that is sharply higher than Trump claimed it would be two years ago. Here's…
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Even before Donald Trump moved into the White House after the 2016 elections, he made a special point of going after the Boeing Co. (NYSE: BA | BA Price Prediction) contract to supply two 737-8s that together comprise Air Force One. The “more than $4 billion” cost of the program was, to Trump’s way of thinking, too much and he demanded that the contract be canceled.
Ultimately the White House claimed that the cost of the Air Force One program would fall to around $3 billion for Boeing’s part of the work, a savings of $1.4 billion negotiated by the president. In its budget request for fiscal year 2020, the Air Force said the total cost of the program is $4.68 billion, including testing, spare parts, hangar construction and other details that an Air Force spokeswoman told Defense One “are typically separate from the prime contractor work … and are part of nearly every system the government acquires.”
Last July, the Air Force awarded Boeing a contract for $3.9 billion to convert the two 747s into Air Force One. The White House again claimed a program cost savings of $1.4 billion from the original price tag that the president had objected to.
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In an email to Defense One, Air Force spokeswoman Capt. Hope Cronin explained the math:
Boeing discussed an uninflated $4.4B price with the President in January 2017. After adjusting for inflation consistent with how we budget for and expend money, and after adding in the risk reduction effort, the $4.4B equates to $5.0B, or $1.1B in savings. More recent Boeing estimates and Boeing’s initial offer push the savings to over $1.4B,” said Capt. Hope Cronin, a service spokeswoman, in an email.
There you have it. The 2018 contract for $3.9 billion and inflation-adjusted savings of $1.4 billion total $5.3 billion as the overall cost of the Air Force One program. The budgeted program cost of $4.68 billion presumably does not include the inflation adjustment.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
