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Air Force gets two Boeing KC-46 tankers after a two-year delay and $3 billion in cost overruns

Key Points
  • The U.S. Air Force has received its first two KC-46 Boeing aerial refueling tankers.
  • The delivery marks a major milestone for the program, which is two years behind schedule and more than $3 billion over budget.
  • Boeing is scheduled to release its fourth-quarter and 2018 financial results before the market opens Jan. 30.
Boeing's KC-46 tanker.
Boeing

WASHINGTON — After a two-year delay, the U.S. Air Force has received its first two Boeing aerial refueling tankers.

The two KC-46 tankers, derived from Boeing's commercial 767 airframe, touched down at McConnell Air Force base in Kansas on Friday after departing the company's Everett, Washington, facility.

The delivery marks a major milestone for the program, which is two years behind schedule and more than $3 billion over budget.

Boeing, the world's largest aircraft manufacturer, is expected to deliver about three tankers a month to the Air Force, which would be approximately 36 aircraft by the end of the year. Boeing plans to build a total of 179 refueling aircraft to replace the Air Force's aging tanker fleet.

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U.S. Air Force takes delivery of new Boeing tankers

The Air Force accepted the first delivery of planes despite outstanding issues with the aircraft. Boeing has agreed to foot the bill for software and hardware upgrades for the camera system used in refueling operations, and the Air Force will finance the redesign of the tankers' boom, which is used to deliver fuel to an aircraft.

The Air Force will also withhold 20 percent of its payment to Boeing until progress is made on aircraft deficiencies.

"Well, there's always technical issues when you take a new weapons system like this, and actually there are fewer technical issues than there are on most major procurements that we do," U.S. Air Force Secretary Heather Wilson told CNBC on Thursday in an exclusive interview.

"But Boeing has a fixed-price contract that they have been working to and they have agreed with the Air Force to fix the items that we have found that are problematic," she added. "So, we are ready to take the next step, which is operational test and evaluation, and get these aircraft in the hands of our airmen."

Boeing, which is the world's second-largest defense firm, bagged a significant number of Pentagon contracts in 2018.

The defense giant is scheduled to release its fourth-quarter and 2018 financial results before the market opens Jan. 30.

Boeing's KC-46 aerial refueling tanker delivers fuel to a jet.
Boeing