Cost overruns at the KC-46 mid-air refueling tanker program have surpassed US$7 billion in recent years, while another fixed-price contract to upgrade two Air Force One planes has created a US$2 billion loss for the top 5 US defense contractor.
Boeing has faced ongoing scrutiny since a series of crises including a mid-air emergency in January 2024 involving a new Alaska Airlines 737 MAX 9 missing four key bolts. In January, Boeing reported an US$11.8 billion annual loss, its largest since 2020, due to problems at its major units, along with fallout from a strike that shuttered production of most of its jets.
Boeing has ceded ground to rival Airbus in the delivery race and entered the crosshairs of regulators and customers following missteps. The Federal Aviation Administration in early 2024 imposed a monthly production cap.
“A program of this size and complexity requires careful oversight to make sure it doesn’t fall behind or have cost overruns,” Democratic Senator Mark Kelly, a former US Navy combat pilot, said in a statement.
Billionaire and presidential adviser Elon Musk has voiced skepticism about the effectiveness of crewed high-end fighters, saying cheaper drones were a better option.
Lockheed, which was recently eliminated from the competition to build the Navy’s next-generation carrier-based stealth fighter, faces an uncertain future in the high-end fighter market after the loss.
“While disappointed with this outcome, we are confident we delivered a competitive solution,” Lockheed said in a statement. “We will await further discussions with the US Air Force.”
While Lockheed could still protest the government’s award to Boeing, the fact Trump announced the deal in a high-profile press conference could reduce the possibility of a public airing of arguments against the agreement from the Bethesda, Maryland-based defense firm.
