Boeing is facing a novel coronavirus-related setback to the VC-25B presidential transport program, causing the company to recognize a $168 million impact in the first quarter.
The VC-25B effort faced “inefficiencies” because personnel were directed to work virtually because of COVID-19. This forced Boeing to re-evaluate its estimate, Greg Smith, the company’s chief financial officer, told reporters April 29 following a first-quarter earnings call.
“The reach-forward loss on VC-25B is associated with engineering inefficiencies from the COVID-19 environment,” according to Boeing’s first-quarter earnings report. “We believe these inefficiencies will result in staffing challenges, schedule inefficiencies and higher costs in the upcoming phases of the program.”
The U.S. Air Force acknowledged the VC-25B program is a victim of COVID-19 because of component delivery delays from overseas suppliers, the service’s acquisition executive, Will Roper, told reporters April 29. However, the V-25B program is a fixed-price contract, meaning Boeing will take the financial hit, not the Air Force.
Smith reiterated that despite the financial loss, the program remains on schedule. Boeing began structural modifications on the first 747-8 aircraft to become a VC-25B in March after removing the interior, engines, auxiliary power units and other subsystems.
The Air Force acquired the 747-8s in 2017 after selecting Boeing to replace two VC-25As that now perform the role. The service anticipates spending $5.3 billion to complete modifications on both aircraft to begin operations at the end of 2024.
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