July 30, 2020 | International, Aerospace
By: Valerie Insinna
WASHINGTON — Boeing must pay another $151 million out of its own pocket for the KC-46 program, but this time the charge isn't associated with technical problems that have plagued the tanker's development.
While Boeing announced its second-quarter earnings Wednesday, it said the KC-46 charge was “primarily driven by additional fixed-cost allocation resulting from lower commercial airplane production volume due to COVID-19.”
In short, because Boeing's commercial plane production has slowed down, it's costing more to produce the KC-46, a derivative of the Boeing 767 airliner that is manufactured on the 767 production line in Everett, Washington, and converted into a military tanker.
Greg Smith, Boeing's chief financial officer, said with the ramp down of production on some commercial airliners, certain fixed costs have been transferred to other programs.
“That's essentially what took place with tanker,” he told reporters during a media roundtable. “It was notable on tanker because of the margin that we're booking on, and therefore turned it into a reach-forward loss. There was impact on some of the other [commercial derivative] programs, but it was not really material at all.”
Boeing is locked into paying any costs associated with the KC-46 that exceed the $4.9 billion firm fixed-price ceiling on its 2011 contract with the U.S. Air Force.
The latest charge means Boeing will have spent more than $4.7 billion in company funds on the KC-46 program — almost equivalent to the Air Force's own investment in the program.
But Smith pointed to the lack of performance-related losses for the KC-46 this quarter as a sign that the program is progressing. “We've still got a lot of work to do, but [we're] making good progress,” he said.
Despite the tanker charge, Boeing's earnings for its defense and space sector were a bright spot for the company, which continues to grapple with financial distress caused by the coronavirus pandemic's impact on the travel industry and the ongoing grounding of the 737 Max.
Boeing Defense, Space & Security logged $7 billion in new orders this quarter, including an award for three additional MQ-25 tanker drones for the U.S. Navy and 24 AH-64E Apache helicopters for Morocco.
During a call with investors, Boeing CEO Dave Calhoun said the defense market remains healthy and that recent contracts “underscore the strength of our offerings.”
May 4, 2021 | International, Aerospace
Turkish Aerospace Industries is designing, developing and will build the TF-X jet, aiming to fly the aircraft around the 2025-2026 time frame.
February 29, 2024 | International, Land
Lawmakers kicked FY24 defense funding further down the road, raising fears at the Pentagon that congressional inaction may soon result in a 1% sequester.
December 10, 2019 | International, Naval
By Jon Harper SIMI VALLEY, Calif. — The Marine Corps intends to divest itself of legacy systems as it transforms into a more mobile and expeditionary force, the service's commandant said Dec. 7. In recent decades Marines have been busy fighting land wars in Iraq and Afghanistan. But now they must prepare for a potential conflict in a naval environment against advanced adversaries such as China, Gen. David Berger told reporters at the Reagan National Defense Forum in Simi Valley, California. “We cannot wait any longer before we start adjusting our service to what we've got to be six, seven, eight years out,” he said. “We have lots of changes we have to make and ... we have to get rid of legacy things in the Marine Corps. We've got to go on a diet. We've got to get back on ship. We've got to become expeditionary again.” What types of legacy systems will be on the chopping block? “Big, heavy things,” Berger said. “Expensive things that we can't either afford to buy or afford to maintain over the life of it. Things that don't fit aboard ships. Things that can't fire hyper velocity projectiles. Things that don't have the range that we're going to need or the precision.” Mobility will be critical in future fights, he noted. Marines must be able to operate from ships or ashore, and move back and forth between domains. Other platforms that could see cuts include manned logistics vehicles and aircraft. “All those things we're going to trim down,” Berger said. The service is also looking to add new capabilities. The commandant did not identify specific systems that the Marines plan to buy, but he provided a flavor of the types of platforms that will be on the shopping list. “Think unmanned. Think expeditionary. Think very light. Think things that we can sustain forward without a huge logistical train,” Berger said. Unmanned logistics vehicles and aircraft are examples of new technologies that the service is interested in. Human beings will still be on the battlefield, Berger noted. “I just don't need them driving a truck delivering chow” if a self-driving platform could perform the task, he said. Drones could also deliver supplies. “Amazon does it. Why wouldn't we do it?” he asked. Unmanned combat aircraft are also on the wish list, he noted. The Marine Corps has been conducting wargames and simulations to help determine how the force should be redesigned for potential future combat scenarios that might occur 10 years out. “We're in the last stages of that,” Berger said. That effort will likely wrap up in late January or early February. Force composition changes will be made over 10 years, but some will begin next year, he said. Officials are examining “every part of our air-ground team,” Berger said. A wide range of capabilities are being looked at. “From individual equipment to crew served [weapons] to F-35s and everything in between.” The analysis will help determine which programs will be killed, trimmed or added, he said. The service needs new weapon systems that can find and kill enemy ships at range from ship or shore. “We have to become a naval force that's lethal in terms of putting at risk another naval force,” Berger said. In the future, large numbers of unmanned air and ground systems could function as motherships that launch other robotic vehicles and drones to conduct missions, he said. A major funding realignment is planned over the next five years. “You'll see a little bit of it” in the fiscal year 2021 budget blueprint, Berger said. “The big muscle movement — that will come in ‘22, ‘23, ‘24 in a big way.” https://www.nationaldefensemagazine.org/articles/2019/12/9/marine-corps-planning-major-program-cuts