KC-46 programme costs rise
Boeing will recognise an after-tax charge of $536 million on its KC-46 aerial refuelling tanker programme when it announces its second-quarter 2015 results on 22 July.
The charge reflects an increase in manufacturing and engineering costs to develop, certify and begin initial production of the KC-46 while keeping up with the schedule to deliver the initial-production models in 2017. The tanker is being developed and tested under a fixed-price Engineering, Manufacturing and Development contract.
The increased cost is primarily related to the rework of the KC-46 tanker's integrated fuel system, which was identified as Boeing conducted verification and tests on the system. The extra investment will support the redesign, retrofit, qualification and certification of the fuel system changes, and the conclusion of the programme's ground and flight testing.
The fuel system is the final major system to be qualified in the tanker programme. Other qualification testing is over 90% complete, and the overall test programme continues to progress.
Dennis Muilenburg, president and CEO, Boeing, said: 'While we are disappointed with this charge, we are investing the necessary resources to keep this vitally important programme on schedule for our customer, and meet our commitments for delivering the initial 18 tankers to the US Air Force by August 2017 and building 179 tankers by 2027.
'We have a clear understanding of the work to be done, and believe strongly that the long-term financial value of the KC-46 programme will reward our additional investment.'
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