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!
President-elect Donald Trump tweeted criticism about Boeing, the lead contractor on the next generation of Air Force Ones, early in the morning on Dec. 6, 2016. 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!" See Figure 1 on PolitiFact.com He later elaborated to reporters staking out Trump Tower, "Well the plane is totally out of control. It's going to be over $4 billion for Air Force One program. 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." The political and defense worlds and the stock market immediately took note, since Boeing is a major American corporation that gets a lot of Pentagon money and employs significant numbers of manufacturing workers in high-wage jobs. When we looked into Trump’s tweet, we found that Trump’s description of the contract lacks some context. (His press office did not respond to an inquiry.) Some background on the Air Force One replacement project As the trade publication Defense One has noted, the two current Air Force Ones -- a modified version of a Boeing 747-200 aircraft known as VC-25 -- were purchased under President Ronald Reagan and were delivered in 1990 under President George H.W. Bush. With Boeing closing down its 747-200 production line 24 years ago, spare parts for the two current planes have become hard to find. And the plane is approaching the end of its expected 30-year life. So during his second term, President Barack Obama ordered a replacement fleet. (By tradition, a president does not order planes that he will expect to use personally.) Since the old model of the basic aircraft isn’t being made any longer, a new one had to be created. The new model will be based on the Boeing 747-8, with four engines and two floors. Trump’s tweet referenced one plane, but the Air Force One program will actually produce two planes, not one. That allows one to undergo maintenance while the other one is available. Of course, Air Force One is more than just a plane. It’s also a mobile command center, with state-of-the-art communications and safety features. The plane must be able to refuel while flying, and the president and his staff need to have communications capabilities equivalent to what is in the Oval Office -- secure video conferences, classified computer access, and nuclear-strike controls. It also needs robust defensive systems such as missile evasion. The new planes will be "both the fastest and longest commercial airliner in the world," according to military.com. They will be able to fly 7,730 nautical miles -- nearly 1,000 more than the current planes -- and will produce 16 tons less of carbon dioxide on a typical flight, according to the company. The extra features, obviously, do not come cheap. In fact, they comprise the bulk of the planes’ cost. Each basic plane costs about $380 million, said Richard Aboulafia, vice president for analysis at the Teal Group Corporation, an aerospace and defense market analysis firm. Ultimately, Aboulafia said, the basic aircraft itself will account for just one-fifth of the entire project cost. How much will the project cost? The Air Force has published a budgetary document that says research, development, testing and evaluation of the new Air Force Ones -- officially known as the Presidential Aircraft Recapitalization -- will cost $2.87 billion between fiscal years 2015 and 2021. However, the project is expected to extend beyond 2021, and experts told PolitiFact it would likely require another $1 billion in subsequent years to finish the job. The Teal Group has estimated that the project will require an additional $858 million between fiscal years 2022 and 2026. That adds up to a grand total of $3.73 billion over 12 years. That’s not "more than $4 billion," as Trump said, but it’s reasonably close -- and it’s no secret that defense contracts have a history of escalating in cost over time. Already, in response to inquiries from the media after Trump’s tweet, an Air Force spokesman told reporters to expect the interim $2.7 billion figure "to change as the program matures." So as a raw number, Trump’s $4 billion figure is in the ballpark. We should add that none of this price-tag includes operations and maintenance, such as aviation fuel, maintenance and pilot salaries. "Operations and maintenance are an inherent part of any such program," said John Pike, director of globalsecurity.org. "Canada was in line to buy the F-35, but then realized that they would actually had to operate the things, and they had sticker shock. Malaysia bought a bunch of MiG-29s without a service contract, to save money, and they soon turned into hangar queens." Such future costs would not involve Boeing, which is tasked with designing and building the planes, not operating them. What the tweet leaves out Clearly, $4 billion is a lot of money. But it’s important to keep some context in mind. First, it’s not clear that Boeing is behind any spiraling of costs; the demands of the project are dictated by the federal government. In addition, while Boeing is serving as the lead contractor on the project, much of the project’s costs are going for electronics and other items that Boeing itself does not produce. If costs on such items are going to go down, Boeing can’t do that directly. To cut such costs, "it is up to Boeing to jawbone their subcontractors," Pike said. Boeing offered some spin of its own in the statement it released after Trump’s tweet. In the statement, Boeing said: "We are currently under contract for $170 million to help determine the capabilities of these complex military aircraft that serves the unique requirements of the president of the United States. We look forward to working with the US Air Force on subsequent phases of the program allowing us to deliver the best planes for the president at the best value for the American taxpayer." By citing only the $170 million allocated to date, the company is ignoring the overwhelming majority of dollars for the project that the company expects to be paid in future years. Second, it’s important to note that the nearly $4 billion figure for the project as a whole is scheduled to be paid out over 12 years, not all at once. And in the context of the entire defense budget, that makes it a pretty small slice. The most recent presidential budget proposal shows defense spending between 2015 and 2026 equaling $8.132 trillion. So the Air Force One project amounts to four-one-hundredths of 1 percent of all defense spending over that 12-year time frame. It’s also a modest project within Boeing’s ledger of business. In 2015, Boeing had $96 billion in revenues. If one assumes the same revenues for all 12 years of the Air Force One project, then the project will account for three-tenths of 1 percent of the company’s overall revenues. Even looking just at the company’s defense, space and security revenues, the Air Force One project would represent about 1 percent. Finally, Trump’s contention that spending is "out of control" is more open to debate. While the program is expensive, it’s so new that it hasn’t busted through budgetary targets yet. "There have been no overruns," Aboulafia said. "This has always been the plan." Our ruling 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 company is actually building two planes, not one. As for the price tag, Trump has more of a point. The project’s current cost is $3.73 billion, which is within shouting distance of Trump’s "more than $4 billion." That’s a projection over 12 years. Also, that figure is an amount that could rise as time goes on. However, Trump glosses over some important context. National-security requirements, not Boeing, have been the primary driver of high costs. Experts say the costs are broadly in line considering the high-tech and security requirements of a presidential plane. The statement is partially accurate but leaves out important details, so we rate it Half True. https://www.sharethefacts.co/share/ff7237d1-b009-406c-a106-f6850c360944
['Boeing']