Boeing To Book $536 Million Charge On KC-46 Tanker In Second Quarter

By Ciara LinnaneMarketWatch Pulse

The Boeing Company said Friday it will book an after-tax charge of $536 million, or 77 cents a share, in the second quarter, due to higher-than-expected costs related to its KC-46 tanker aircraft. The aerospace giant said the higher costs are being driven by a required reworking of the airplane's fuel system. ""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," Boeing Chief Executive Dennis Muilenburg said in a statement. The company still expects the global market for refueling tankers will be worth $80 billion and expects the KC-46 program to be profitable in its first production phase. The company will update guidance on July 22 and expects to adjust its full-year outlook because of the charge. Shares fell 0.9% in premarket trade, but have gained 14% in the year so far, outperforming the Dow Jones Industrial Average, which is up just 6.7%.

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