Report: Boeing could lose $700M on initial tanker deal

Published 2:32 pm Monday, July 11, 2011

The Boeing Co. could lose up to $700 million in cost overruns on initial tanker deliveries to the U.S. Air Force, reports Bloomberg News.

The company already was expec

ted to exceed its budget by $300 million. But a recent disclosure by the Air Force indicates that Boeing sees another $432 million in overruns.

The Air Force also could be on the hook for $600 million. The contract for the initial 14 tankers was at a price of up to $4.9 billion. Any extra costs between $3.9 billion and $4.9 billion are to be split 60-40 by the Air Force and Boeing, Bloomberg reports.

Any costs that exceed the $4.9 billion are up to Boeing to cover.

Boeing is expected to deliver these first 14 tankers by 2017. The Chicago-based company beat out EADS for a contract to replace 179 of the Air Force’s aerial refueling tankers.