Boeing racks up $402M cost overrun on KC-46 tanker

WASHINGTON: Boeing has tallied up a new $402 million charge on the KC-46 tanker program, the company announced today.

The latest cost overrun — disclosed in fourth quarter 2021 earnings statements — is the first charge to the KC-46 program since a $275 million loss in Q4 2020, which was also attributed to COVID-19 related disruptions.

The KC-46 program has racked up a total of $5.4 billion in pre-tax charges over the course of its development — all costs Boeing must bear due to the terms of its fixed-price contract with the US Air Force.

The latest charge “was primarily driven by evolving customer requirements for the remote vision system, as well as factory and supply chain disruptions including the impact of COVID-19,” Boeing spokeswoman Didi VanNierop said in an email to Breaking Defense.

Under the 2011 agreement, Boeing is responsible for paying costs in excess of its $4.9 billion contract with the service, meaning that at this point, Boeing has paid more in cost overruns than the Air Force has paid to develop its newest tanker.

The Air Force plans to buy 179 KC-46s over the course of the program. Due to longstanding issues with the tanker’s remote vision system — a series of cameras that allows the boom operator to oversee the refueling process, which Boeing has agreed to pay to redesign — the service will not be able to declare the KC-46 fully operational until fiscal 2024.

Currently, the KC-46 can conduct “limited” aerial refueling operations in support of about 70 percent of military aircraft, Lt. Col. Kevin White, Air Mobility Command’s deputy leader of the KC-46A cross functional team, said in a statement in December.