Boeing gets $3.9 billion contract for new Air Force One jets

WASHINGTON -- Boeing Co has received a $3.9 billion contract to build two 747-8 aircraft for use as Air Force One by the US president, due to be delivered by December 2024 and painted red, white and blue, officials said on Tuesday.

The Pentagon announced the decision on Tuesday, saying Seattle-based Boeing's previously awarded contract for development work had been expanded to include design, modification and fielding of two mission-ready presidential 747-8 aircraft.

The contract followed the outlines of the informal deal reached between Boeing and the White House in February. That agreement came after President Donald Trump objected to the $4 billion price tag of a previous Air Force One deal, complaining in a Twitter post that "costs are out of control" and adding "Cancel order!"

The White House said in February the new deal would save taxpayers more than $1.4 billion, but those savings could not be independently confirmed.

Air Force budget documents released in February for fiscal year 2019 disclosed a $3.9 billion cost for the two-aircraft program. The same 2018 budget document, not adjusted for inflation, showed the price at $3.6 billion.

The Boeing 747-8s are designed to be an airborne White House able to fly in worst-case security scenarios, such as nuclear war, and are modified with military avionics, advanced communications and a self-defense system.

A congressional official briefed on Tuesday about the deal indicated it was little changed from the informal agreement reached in February, calling for two 747-8 aircraft to be built for $3.9 billion and delivered by December 2024.

Trump told CBS in an interview that aired on Tuesday that the new model Air Force One would be updated on the inside and have a different exterior color scheme from the current white and two shades of blue dating back to President John F. Kennedy's administration.

"Red, white and blue," Trump said. "Air Force One is going to be incredible. It's going to be the top of the line, the top in the world. And it's going to be red, white and blue, which I think is appropriate."

source: news.abs-cbn.com

The jumbo jet faces a make or break year

SEATTLE/ PARIS -- The jumbo jet, for many years the workhorse of modern air travel, could be close to running out of runway.

Last year, there were zero orders placed by commercial airlines for new Boeing 747s or Airbus A380s, reflecting a fundamental shift in the industry toward smaller, twin-engine planes. Smaller planes cost less to fly than the stately, four-engine jumbos, which can carry as many as 525 passengers.

The slump in sales of the jets has raised questions over how long manufacturers can sustain production. It has also fueled internal debate in both companies over the future of the planes, sources said.

The outcome of those discussions will affect the value of existing fleets and thousands of production jobs at the plane makers and their many parts suppliers.

Sales forces at Airbus Group NV and Boeing Co are fighting for potential orders plane by plane as they seek to keep production going beyond the end of the decade, said other aviation market sources. The aircraft makers are offering discounts of at least 50 percent from catalog prices of around $400 million for a jumbo jet, those sources said. Airbus has said it is also considering a revamp to make its 'superjumbo' more attractive to buyers.

Boeing in September plans to slow the pace of production of its latest 747-8 model to an average of 1.3 planes a month from 1.5 currently. At that rate the orders it already has in hand will only keep the production line going for 2 1/2 years.

The crunch, though, will come earlier because it can take up to two years from ordering the first part to finishing a jet, and no one wants to start the process if it is unclear whether the plane will be completed and delivered to a customer.

"I can see demand for the 747-8 in small numbers, but you have got to ask if they can keep the production line open if they don't get some new orders," said Tony Whitty, chief executive of UK-based aircraft re-marketing firm Cabot Aviation, which trades, manages and leases jets. "You also wonder at what price they are selling."

LONG DESCENT

Use of the 747 has dropped steadily over the last two decades, reflecting the rise of two-engine jets that have come close to matching its range. Over the same period production of large twin-engined jets like the Boeing 777 has risen seven-fold. Last year, Boeing booked 283 new orders for the 777 and now has a backlog of 547 orders.

Airbus is more upbeat than Boeing about the prospects for jumbo jets but both now agree it has become a niche category. Airlines still need jumbo jets but only for certain polar flights - where a two-engine jet may be less safe than a four-engine jumbo because of the lack of places for an emergency landing - and busy routes where landing slots are scarce.

The risk is most visible for Boeing, where investors could face a $1 billion accounting charge if 747 production is shut down, according to company disclosures.

Boeing recently received a high-profile boost with a provisional order for two new jets to serve as Air Force One for the U.S. President but the 747's future depends a lot more on sales of the much-less glamorous windowless freight model. That has a unique hinged nose and can carry very large equipment, such as oil drilling rigs.

So far this year, Boeing has sold three. Atlas Air Worldwide recently said it plans to order more for its cargo fleet, but wouldn't say when or how many. The world's biggest 747 freight customer, Cargolux, also says it likes the plane, but has a pending order for only three.

A sustained upturn in air freight traffic could secure the 747 a longer future. International freight traffic rose 4.8 percent last year, but volume has only just recovered from a collapse in 2009 during the financial crisis.

CARGO HAULER

Boeing reckons some 143 older freighters will need to be replaced, stretching demand for the 747 through the 2020s, the program vice president, Bruce Dickinson, said in an interview.

"We know there is a long-term market for this airplane and some of the unique things it can do," Dickinson said from his office overlooking the 747 production line at the giant Everett plant near Seattle.

But Boeing's effort to sell new 747s is overshadowed by the many older 747s available for lease, which have suddenly been made more attractive because of a big slide in fuel prices since the middle of last year. Leasing companies say there is scant interest in new 747-8s when 82 freighters are baking in desert parking lots.

The older planes can be leased for as little as $400,000 a month, compared with up to $1.4 million in monthly lease payments for a new 747-8 freighter, experts say.

"That's a pretty big difference," said Gueric Dechavanne, vice president at Collateral Verifications, a Connecticut-based aircraft appraisal firm.

Some companies have extended 747 leases for three to four years, said Aengus Kelly, chief executive of leasing company AerCap.

"It's a challenge to lease a freighter," Kelly told Reuters. "It's definitely a challenge to sell them."

Airbus's A380 is a newer plane - its first flight was almost exactly 10 years ago - and has become a mainstay of Middle East carriers that offer opulent suites to first class passengers. But the drop in demand is prompting Airbus to weigh whether to revamp the plane with new engines, or carry on with the existing model.

Airbus has 161 orders for the planes in hand, or more than five years of production. But it acknowledges that not all of those jets will be delivered, leaving it with barely three years of guaranteed output. Given the long lead times, Airbus must bring in more orders soon to avoid having to taper production.

"We are always looking at product improvements, but there is so much untapped potential in the existing aircraft," said Airbus marketing head Chris Emerson.

Airbus could announce an A380 revamp as early as the Dubai Airshow in November, but must first find a way to assure investors it can recover several billion dollars of development costs, sources said. Analysts say on option could be to apply for more European government loans, though that risks exacerbating trade tensions with the United States.

Top customer Emirates is offering to double its planned purchase of 140 A380s if Airbus carries out the improvements, which the Dubai carrier's Chief Executive Tim Clark tells Reuters will be "extremely good for the (airline's) bottom line."

But Airbus's board is unlikely to back a new A380 model for just one customer.

source: www.abs-cbnnews.com

Boeing Black: This smartphone will self-destruct...

NEW YORK -- Boeing Co on Wednesday unveiled a smartphone that appears to come straight from a James Bond spy movie.

In addition to encrypting calls, any attempt to open the casing of the Boeing Black Smartphone deletes all data and renders the device inoperable.

The secure phone marks an extension of the communications arm of the Chicago-based aerospace and defense contractor, which is best known for jetliners and fighter planes.

Such a phone might have prevented damage to Washington's diplomacy in Ukraine from a leaked telephone call. A senior U.S. State Department officer and the ambassador to Ukraine apparently used unencrypted cellphones for a call about political developments in Ukraine that became public.

Boeing's tamper-proof phone is aimed at government agencies and contractors who need to keep communication and data secure, according to Boeing and filings with the U.S. Federal Communications Commission.

Made in the United States, the phone runs on Google Inc's Android operating system. The 5.2-by-2.7-inch (13.2-by-6.9 cm) handset, slightly larger than an iPhone, uses dual SIM cards to enable it to access multiple cell networks instead of a single network like a normal cellphone.

Due to the phone's security features, Boeing is releasing few details about the wireless network operators or manufacturer it is working with, and has not provided a price or date by which the phone might be widely available, but said it has begun offering the phone to potential customers.

Boeing's website says the phone can be configured to connect with biometric sensors or satellites. Other attachments can extend battery life or use solar power.

The phone can operate on the WCDMA, GSM and LTE frequency bands and offers WiFi and Bluetooth connectivity.

The company has been developing the phone for 36 months, said Boeing spokeswoman Rebecca Yeamans.

"We saw a need for our customers in a certain market space" that Boeing could meet with its technology expertise, she said.

A sample purchase contract submitted to the FCC says the phone would be sold directly by Boeing or its agents.

Yeamans said Boeing combined its own engineers with the talent of people who joined Boeing recently through acquisitions that included Argon ST Inc, Digital Receiver Technology Inc, Kestrel Enterprises Inc, Ravenwing Inc, and Solutions Made Simple Inc.

source: www.abs-cbnnews.com