Photo credit: Boeing Boeing announced a second cost over run to its under development KC-46 aerial refueling tanker program, due to ...
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| Photo credit: Boeing |
Boeing announced a second cost over run to its under development KC-46 aerial refueling tanker program, due to a redesign required for the aircraft's integrated fuel system.
Boeing says the after-tax charge of $536 million ($0.77 per share) was required due to higher estimated engineering and manufacturing costs to complete development, certification and initial production of the tanker aircraft.
"While we are disappointed with this charge, we are investing the necessary resources to keep this vitally important program on schedule for our customer, and meet our commitments for delivering the initial 18 tankers to the U.S. Air Force by August 2017 and building 179 tankers by 2027," said Boeing President and Chief Executive Officer Dennis Muilenburg.
"We have a clear understanding of the work to be done, and believe strongly that the long-term financial value of the KC-46 program will reward our additional investment."
Boeing said it will recognize the charge on the program when it announces second-quarter 2015 results on July 22.
The rework on the airplane's integrated fuel system was identified as Boeing prepared for and conducted test and verification of that system during the second quarter. The added investment will support the engineering redesign, manufacturing retrofit and qualification and certification of the fuel system changes, and the conclusion of ground and flight testing on the program.
The KC-46 fuel system is a complex, integrated system that provides fuel to the aircraft's engines and the capabilities to refuel other aircraft in flight. It is the final major system to be qualified in the KC-46 development program.
On a pre-tax basis at the segment level, Boeing Commercial Airplanes will report a charge of $513 million- as the platform is based on a commercial Boeing 767 aircraft, and the Boeing Military Aircraft segment of Boeing Defense, Space & Security will report a charge of $322 million.
The company will update guidance on Wednesday, July 22 and expects an adjustment to 2015 EPS guidance that will reflect the impact of the Tanker charge. However, the company expects that revenue and cash flow guidance for the year will remain unchanged.
As part of a contract worth $ 4.9 billion, awarded in 2011 to design and develop the Air Force’s next-generation tanker aircraft, Boeing is building four test aircraft – two 767-2Cs and two KC-46A Tankers.
The first flight of the KC-46 tanker plane, a Boeing 767-2C, was achieved in Dec, 2014.
The 767-2Cs entered flight test as commercial freighters prior to receiving their aerial refueling systems, while the KC-46s will fly as fully equipped tankers through the FAA and military certification process.
The 767-2C test aircraft has proved its airworthiness with its refueling hardware installed, Boeing announced during the Paris Air Show 2015. Pilots and engineers has tested the aircraft’s aerodynamics and performance with the refueling boom and wing aerial refueling pods, or WARPs, attached.
The KC-46 tanker program’s second test plane, known as engineering and manufacturing development two, or EMD-2, is on its way to becoming a true KC-46 Pegasus aircraft. Boeing has installed the fully-functional refueling boom. The WARPs are on scheduled for installation very soon.
Boeing is on contract to deliver the first 18 of 179 KC-46 aircraft to the Air Force by 2017.
The KC-46, with a maximum take off weight of 188 ton, will have a transferable fuel capacity of 94 ton, and is powered by two Pratt & Whitney PW4062 engines each rated at 282 kN.
Boeing continues to forecast an $80 billion global market for refueling tankers and anticipates that KC-46 program profitability will be achieved during the production phase.
