Exclusive: Boeing U.S. tanker program seen $1 billion over budget

WASHINGTON Fri Mar 21, 2014 3:42pm EDT

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The Boeing logo is seen at their headquarters in Chicago, April 24, 2013.


Credit: Reuters/Jim Young







WASHINGTON (Reuters) – The U.S. Air Force on Friday estimated that Boeing Co’s (BA.N) development of a new refueling plane will cost nearly $ 1.1 billion more than initially planned, but the terms of the government’s contract mean Boeing must cover the added costs.




The latest estimate from the Air Force office that runs the KC-46A aerial tanker program puts the total development cost at $ 5.85 billion.




Air Force spokesman Ed Gulick said the latest estimate was $ 250 million over last year’s projection, but gave no additional details on what drove the increase. He said the annual mandatory estimates could increase or decrease as the program continued.




“Despite this estimated increase, the government liability remains capped at the contract ceiling price of $ 4.9 billion, and Boeing continues to meet all contractual milestones, including the development and delivery of the four EMD aircraft,” Gulick said.




(Reporting by Andrea Shalal; Editing by Richard Chang)





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Reuters: Business News

Exclusive: Boeing U.S. tanker program seen $1 billion over budget