The U.S. will buy two 747 jumbo jets from Boeing Co. for use as the next Air Force One fleet, converting planes previously ordered by a bankrupt Russian airline.
Continue Reading Below
Boeing suggested selling the planes as part of an effort to cut the cost of an Air Force One replacement program that President Donald Trump criticized as too expensive before taking office.
"We're working through the final stages of coordination to purchase two commercial 747-8 aircraft and expect to award a contract soon," Air Force spokeswoman Ann Stefanek said on Tuesday.
The two planes were once destined for sale to Transaero, a Russian carrier that collapsed in 2015. Most of that company has been absorbed into Aeroflot Russian International Airlines, the country's state-owned flag carrier. Boeing removed the original Transaero order for three 747-8 jets from its books last month.
The aerospace giant offered the Air Force a substantial undisclosed discount on the $387 million list price of each plane, according to a person familiar with the negotiations. The White House and the Secret Service changed the specifications for the new Air Force One fleet earlier this year as part of the cost-cutting effort. Converting the planes to meet the enhanced security and communications needs of the presidential fleet is expected to be cheaper than building two new aircraft.
In December, Mr. Trump criticized a program he claimed would cost $4 billion. However, the Pentagon's estimated budget has remained steady at around $3.1 billion for the planes, which will replace two aging jumbos that have become costly to maintain. Boeing has received $170 million in development contracts so far and was the sole bidder for the new presidential jets.
Continue Reading Below
"This deal is focused on providing a great value for the Air Force and the best price for the taxpayer," a Boeing spokesman said.
Work was due to start in 2019, with the planes entering service in the fall of 2023. Acquiring the two undelivered 747s would allow this timetable to be accelerated, said the person familiar with the discussions.
The planned Air Force purchase was earlier reported by Defense One.
Write to Doug Cameron at email@example.com
(END) Dow Jones Newswires
August 01, 2017 17:56 ET (21:56 GMT)