Bloomberg News

Boeing Poised to Be Sole Bidder on Air Force One Jet Replacement

September 12, 2013

Boeing Co. (BA:US), whose aircraft have ferried U.S. presidents for more than half a century, is poised to be the only contender for a Pentagon contract to provide the next Air Force One jetliner early next decade.

Boeing said it’s reviewing an Air Force request for information about the plane issued Sept. 9 and isn’t ready to announce a bid. Toulouse, France-based Airbus SAS doesn’t intend to make a proposal based on its double-decker A380 jet.

That leaves Boeing as the “only credible offerer” for the iconic jet, said Loren Thompson, a defense analyst with the Arlington, Virginia-based Lexington Institute. The Air Force wants a four-engine plane, and the A380 and Boeing’s 747-8 are the only Western commercial models that fit the bill.

“The government might accept bids from companies other than Boeing, but I don’t believe it would actually award the program to them,” Thompson said in an e-mail. “It isn’t going to buy an Airbus plane, and the integration challenge of turning a 747 into a next-generation Air Force One is just too demanding for anyone other than Boeing.”

It’s still premature to say whether Boeing intends to bid, Dianna Ramirez, a spokeswoman for Boeing’s military aircraft business, said this week in a phone interview.

The survey, an early step in the process, aims to identify sources with the expertise, capability and experience to deliver the next presidential aircraft, Charles Gulick, an Air Force spokesman, said in an e-mail. Potential participants could range from a single large contractor to a systems integrator that modifies a four-engine airframe, he said.

Boeing Boost

Winning the next version of Air Force One would provide a boost to Boeing’s 747-8 Intercontinental, its largest and most expensive passenger jet with a list price of $356.9 million, as it slows production amid slumping sales for four-engine aircraft. Boeing, based in Chicago, has sold nine customized versions of the jumbos to clients that include foreign heads of state, Doug Alder, a Boeing spokesman, said in an e-mail.

The Pentagon is looking to replace its aging fleet of Boeing 747-200 aircraft, which will reach their planned 30-year service life in 2017. The next Air Force One jets are estimated to begin operations in fiscal 2023, Gulick said.

The Air Force expects the next jets to have the range to fly between continents and comparable interiors to the current 747, whose features include work and sleeping quarters for the president and first family, according to the survey, which is posted on a government website.

Strong Incumbent

The Obama administration’s budget for fiscal 2014 has allocated $1.14 billion to be spent on research and development of the new presidential aircraft through 2018. The total includes one aircraft, which would be purchased in fiscal 2017 and modified for system integration and developmental testing before it is added to the presidential fleet, Gulick said.

After supplying Air Force One aircraft since 1962, Boeing “is in a pretty strong incumbent position including political backing” for the next contest, Robert Stallard, a New York-based aerospace and defense analyst with RBC Capital Markets, wrote in a Sept. 10 research note to clients.

Airbus parent European Aeronautic Defence & Space Co. (EAD) doesn’t plan to duel with Boeing as it did over an earlier Air Force contract for aerial refueling tankers.

“We do not anticipate bidding for Air Force One,” Guy Hicks, a spokesman for EADS North America, said in an e-mail. “Our strategic intent when we bid on our major programs is to industrialize in the U.S. to support production.”

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net; Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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