NEWS

Donald Trump Says He'll Cancel Boeing's Air Force One Contract

“We’ll have specifics after the president is sworn in,” a spokesman said.

06/12/2016 10:00 PM IST | Updated 08/12/2016 1:51 AM IST

President-elect Donald Trump said Tuesday that he will cancel Boeing’s contract to build a new Air Force One, citing “out of control” costs.

Trump tweeted, “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”

The current cost of the program is not, however, more than $4 billion. The Defense Department has budgeted $1.65 billion for the two planes, Reuters reported in January when Boeing won the contract.

In response to Trump’s comments, Boeing said its current contract with the Air Force is just $170 million

It’s not clear if Trump will act on his threat. Later in the morning, he told reporters assembled at Trump Tower that costs are “totally out of control. It’s going to be over $4 billion for Air Force One ... and I think it’s ridiculous. 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,” he added.

“We’re going to look for ways to save money,” Trump spokesman Jason Miller said on a call with reporters on Tuesday morning. “We’ll have specifics after the president is sworn in.”

Sen. Claire McCaskill (D-Mo.), a member of the Armed Services Committee, which oversees defense contracts, was perplexed by Trump’s claims. “I don’t know where he got the number — he certainly didn’t get it from Boeing,” she said. “All of it has been contracted — it is a planning contract — in order for the Air Force to avoid cost overruns and unreasonable requirements. So I don’t know how he tweets a number when no one knows where it comes from.”

The Air Force issued its own statement Tuesday afternoon contradicting the soon the be commander-in-chief, saying it was working with Boeing to finalize the contract and cost. While the Air Force has budgeted $2.7 billion in 2017 for research and development of the new Air Force One, it said this number would likely change.

Boeing shares fell just under 1 percent when the stock market opened. By early afternoon, Boeing shares had erased the gains and were just about flat for the day. Miller said that Trump sold the Boeing stock he had owned in June. Trump’s transition team did not immediately provide documentation to back up Miller’s claim.

A Boeing spokesperson declined to comment on the matter. 

We want Boeing to make a lot of money, but not that much money. President-elect Donald Trump

Trump’s threat to cancel a high-profile defense contract is not out of the ordinary. Shortly after taking office, President Barack Obama criticized a $11.2 billion project to build a fleet of 28 new Marine One helicopters for him to use.

“The helicopter I have now seems perfectly adequate to me. Maybe I’ve been deprived and I didn’t know it,” Obama said in response to a question from Sen. John McCain (R-Ariz.), who had singled out the helicopter contract as an example of wasteful spending. “It is an example of the procurement process gone amok, and we are going to have to fix it.” 

Building a new Air Force One is expensive because the plane must have “unique communications, safety and self-protection features so that the president can function under the most trying circumstances — like nuclear war,” defense consultant Loren Thompson told The Washington Post.

On Monday night, The Washington Post’s Craig Whitlock and Bob Woodward reported that the Defense Department had buried a report that found $125 billion in waste. The report showed that the Pentagon spends about a quarter of its budget on what are essentially back-office tasks. 

Trump’s criticism of Boeing may not, however, have been triggered by the cost of the new Air Force One project alone. The company announced last year that it would open a factory in China to do final assembly work on certain types of planes ordered by Chinese customers, The Wall Street Journal reported. China, in turn, has agreed to buy $38 billion in planes from Boeing.

Boeing is no stranger to the long, complicated process of defense contracting and has a formidable lobbying presence in Washington. The company is also not afraid to push state and local governments for tax breaks to increase its profitability. In 2001, Boeing announced it would move its headquarters from its historic home in Seattle to Chicago. In return, Chicago offered the company a set of incentives worth $60 million, beating out Denver and Dallas in a tax-break bidding war. 

In September, Boeing won approval from the U.S. government to sell 109 planes worth $17.6 billion to Iran Air. Previously, Boeing and other American companies had been restricted from doing business with Iran due to U.S. sanctions against the country. Those sanctions were relaxed, however, as part of the Iran nuclear deal. Europe’s Airbus has also been allowed to sell planes to Iran in the wake of the agreement.

Michael McAuliff contributed reporting.

This story has been updated with statements from Claire McCaskill and the Air Force.

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