Tuesday, February 27, 2018

President Trump strikes deal with Boeing for new Air Force One planes

EXCLUSIVE: President Trump has struck an “informal” deal with Boeing for new Air Force One planes, according to the White House -- resulting from negotiations that started before he took office.

“President Trump has reached an informal deal with Boeing on a fixed price contract for the new Air Force One Program. Thanks to the president’s negotiations, the contract will save the taxpayers more than $1.4 billion,” Deputy Press Secretary Hogan Gidley said Tuesday.

The deal is worth $3.9 billion. Officials say it represents $1.4 billion in savings from estimates of over $5 billion for two airplanes and related costs.

A Boeing official said the agreement covers two aircraft, “including things unique to Air Force One such as a communications suite, internal and external stairs, large galleys and other equipment.”

The company said in a statement: “Boeing is proud to build the next generation of Air Force One, providing American Presidents with a flying White House at outstanding value to taxpayers. President Trump negotiated a good deal on behalf of the American people.”

The president has been working to negotiate a new Air Force One deal ever since the presidential transition period in late 2016, when he complained on Twitter about the cost of the Boeing project and threatened to cancel the order.

He said at the time the costs were “out of control.” 

The original projected price of the contract was $3 billion, but costs kept rising. When Trump objected in late 2016, he complained that costs were creeping past $4 billion.

Now, the White House says the costs would have been over $5 billion. According to an official with knowledge of the program, though, the total cost estimate was always over $5 billion -- the official explained that Trump simply “was given bad information in 2016” when he tweeted that the cost was $4 billion.

The planes are meant to replace the aging Reagan-era aircraft currently in use. 

“I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money, but not that much money,” Trump said in December 2016.  

Defense One reported last week that Trump was in the final stages of negotiating the deal for two new airplanes, and met with Boeing CEO Dennis Muilenburg at the White House.

The negotiations covered the overhaul of two 747 airliners.

Original article can be found here ➤  http://www.foxnews.com

WASHINGTON — President Donald Trump has reached an informal deal with Boeing to provide the next generation of presidential aircraft, the White House announced Tuesday. 

Deputy press secretary Hogan Gidley said Tuesday that the president negotiated a $3.9 billion "fixed price contract" for the new planes, known as Air Force One when the president is on board.

It follows years of negotiations between Boeing and the U.S. Air Force — and Trump's personal intervention since his election.

In December 2016, Trump tweeted that costs for the program were "out of control, more than $4 billion," he added. "Cancel order!"

The White House now says the original cost estimate was actually over $5 billion for the two airplanes and development program.

Boeing CEO Dennis Muilenburg met multiple times with Trump to discuss the Air Force One contract, most recently last week.

Gidley said the agreement would save the taxpayers more than $1.4 billion.

Boeing, in a statement, said it is "proud to build the next generation of Air Force One, providing American Presidents with a flying White House at outstanding value to taxpayers."

"President Trump negotiated a good deal on behalf of the American people," they said.

The agreement includes the two 747-800 aircraft, and the cost of modifying the commercial planes with the equipment needed to support the president, including external stair, large galleys and a secure communications suite.

As an example of the unusually high costs associated with Air Force One, the Pentagon announced in December that Boeing was given a $23.7 million contract to design, make and install refrigerators for the president's planes.

The White House said the deal would put Boeing on the hook for cost overruns. In 2011, Boeing agreed to a $4.9 billion fixed-price contract with the Air Force for a refueling tanker, the KC-46. Through late last year, cost overruns had reached about $2.9 billion in pretax costs.

Boeing is one of the largest employers in the Charleston region, where it assembles the 787 Dreamliner passenger jet. 

Original article  ➤  https://www.postandcourier.com

The U.S. deal with Boeing that lowered the cost of Air Force One by more than $1.4 billion isn’t the first one involving the manufacturer and President Donald Trump.

Over the course of the president’s first year in office, Boeing has sometimes signed agreements at the White House with Trump looking on.

Most recently, Norway’s Prime Minister Erna Solberg announced in January during a joint press conference with Trump at the White House. that the country would purchase five P-8A Poseidon aircraft from Boeing, A derivative of Boeing’s Next Generation 737-800, the aircraft is used for long-range anti-submarine and anti-surface warfare, as well as intelligence, surveillance and reconnaissance missions.

Singapore Airlines inked a deal worth $13.8 billion with Boeing last November for 20 of the company’s 777-9 aircraft and 19 of its 787-10 Dreamliner jets. The airline had already placed an order for 30 of the Dreamliners, serving as the initial customer for the long-haul jet. The airline’s CEO, Goh Choon Phong, signed the deal at the White House, joined by Kevin McCalister, the president and CEO of Boeing Commercial Airplanes, and Trump, who said the agreement would employ 70,000 people in the U.S.

Boeing signed a memorandum of understanding in September with Malaysia Airlines for 16 airplanes at a ceremony at the St. Regis Hotel in Washington, D.C. During a meeting with Trump, Malaysia’s Prime Minister Najib Abdul Razak said the country intended to have the flag-carrying airline purchase more Boeing aircraft in future to help strengthen the American economy.

“We have committed to 25 planes of the 737 MAX 10, plus eight 787 Dreamliners, and a very strong probability—not possibility—that we will add 24 to 25 more 737 MAX 10 in the near future,” Razak said during the meeting. “So within five years, the deal will be worth beyond $10 billion.”

Trump also owns a Boeing 757, which he used to travel to various stops during his presidential campaign.

Original article can be found here ➤  https://www.foxbusiness.com

The Trump administration said it has reached an initial deal with Boeing Co. to buy and convert two jumbo jets to replace the aging planes that fly as Air Force One.

The informal agreement for the heavily modified 747s would save $1.4 billion from the original estimate, according to administration officials, and the total cost would be capped at $3.9 billion. The Air Force One deal would take the planned spending on new presidential aircraft and helicopters to $9 billion over the next five years, based on Tuesday’s announcement and Pentagon budget documents.

President Donald Trump had criticized the cost of the Air Force One replacement program before taking office, threatening in December 2016 to cancel it unless the price fell from a total estimated $4 billion at the time. Talks on replacing the existing jumbo jets that serve as Air Force One have dragged on for months, with the two sides agreeing on a fixed-price structure that would leave Boeing on the hook for any cost overruns, unless these are driven by changes to the jets’ capabilities.

“Thanks to the president’s negotiations, the contract will save the taxpayers more than $1.4 billion,” White House spokesman Hogan Gidley said Tuesday.

The White House didn’t comment on why it believed costs had inflated to more than $5 billion. Budget documents and officials previously pegged the price tag at around $4 billion.

Boeing said the $3.9 billion included the cost of the two planes, some design contracts already awarded and conversion work including “a communications suite, internal and external stairs, large galleys and other equipment.” Boeing has yet to be awarded the largest part of the proposed deal, for engineering and conversion work on the planes. The Air Force is also spending more than $300 million on new hangars for the jets.

The U.S. Navy also is buying a new fleet of helicopters to transport the president and officials. The Sikorsky unit of Lockheed Martin Corp. secured the contract in 2014 to provide 23 helicopters at an estimated cost of $4.8 billion.

The U.S. Air Force—which oversees the Air Force One program—last year agreed to buy two jumbo jets from Boeing previously ordered by a bankrupt Russian airline in an effort to trim costs. The two planes were once destined for sale to Transaero, a Russian carrier that collapsed in 2015. Most of that company has been absorbed into Aeroflot Russian International Airlines , the country’s state-owned flag carrier.

Boeing offered the Air Force a substantial undisclosed discount on the $387 million list price of each plane, according to a person familiar with the negotiations. The White House and the Secret Service changed the specifications for the new Air Force One fleet last year as part of the cost-cutting effort.

Work is due to start in 2019, with the planes entering service in the fall of 2023, but buying the two undelivered 747s would allow this timetable to be accelerated, said a person familiar with the new agreement.

Original article can be found here ➤ https://www.wsj.com