Boeing Losses on KC-46 Tanker Top $7B
With more than 70 percent of the planned fleet already ordered, the plane remains a financial burden.
Boeing’s losses from building what was supposed to be a “low risk” aerial refueling tanker for the U.S. Air Force now top $7 billion, the company disclosed Wednesday.
The Arlington, Virginia-based company said it lost another $245 million building the KC-46 in the first three months of 2023. The losses were due to a “supplier quality issue resulting in factory disruption and rework,” the company said in a statement.
The quality problem is with the plane’s fuel tanks, which were improperly painted by a subcontractor, The Air Current first reported last month.
“The good news is we understand it and we're progressing through that rework,” Boeing CEO Dave Calhoun said on the company’s quarterly earnings call. “On the operational side, the tanker is continuing to perform its mission well.”
The U.S. Air Force has been increasingly using the 69 KC-46 tankers in its fleet for refueling missions around the world. The service has already ordered 128 tankers—more than 70 percent of the 179 it intends to buy. Japan and Israel have also purchased the KC-46.
And despite the program’s troubled history, the Air Force could buy an additional 75 more to replace Eisenhower-era KC-135 tankers. Calhoun on Wednesday called the potential extra tankers “a great opportunity for us.”
The KC-46 is a heavily modified version of the commercial Boeing 767 airliner. The company still builds freighter versions of the 767 for cargo airlines, and those commercial 767s are also affected by the fuel tank problems.
Technical and quality control problems have bedeviled Boeing’s KC-46 since 2011, when the Air Force chose the company over rival Airbus to begin replacing its Cold War fleet of tankers. At the time, the company claimed the “tankers will be built using a low-risk approach to manufacturing by a trained and experienced U.S. work force at existing Boeing facilities.”
Twelve years later, the plane still remains a drag on the company’s bottom line, even though it’s been praised by the Air Force in recent years.
“We have to get the tanker [to be] more predictable,” Boeing CFO Brian West said at a Bank of America investors conference last month.