Boeing announced a second-quarter charge of $536 million on its KC-46 tanker on Friday, chalking up the additional costs as needed to fix problems with the jet’s integrated fuel system. Boeing is developing the tanker under a $4.9 billion program that also includes setting up the factory, test, and delivering the first 18 jets by August 2017. In a statement, Boeing said its charge reflects “higher estimated engineering and manufacturing development costs … while holding to the program schedule” for first production deliveries. Boeing said it’s “disappointed” but is “investing the necessary resources to keep this vitally important program on schedule for our customer.” The program calls for a total of 179 aircraft to be delivered by 2027. The charge covers costs to redesign the fuel system, make factory changes to accommodate the redesign, certify the changes, and test them. Boeing President and Chief Financial Officer Dennis Muilenbu?rg said the company has “a clear understanding of the work to be done, and believes strongly that the long-term financial value of the KC-46 program will reward our additional investment.” The company sees a potential world market of $80 billion in tanker sales. (See also Can Boeing Make Back Its Investment.)
The U.S. supports “a stronger and more capable” European defense, Defense Secretary Lloyd J. Austin III said during an Oct. 22 press conference in Brussels—but that defense should not duplicate the functions and capabilities of the NATO alliance.