Boeing Co. has said this Friday that it was going to take a charge of $536 million post taxes as part of its results in the 2nd quarter in order to deal with the problems related to the fuel system of the KC-46A aerial refueling tanker which it is currently developing for the US Air Force.
This company said that the charge, which is around seventy-seven cents per share, is going to result in lower yearly earnings. Additional funds were necessary to cover costs for certification, initial production and development of this aircraft to keep the $49 billion program of delivering 18 such tankers by August of 2017 on track.
This is the 2nd time that Boeing is taking a charge on this tanker which is among the biggest defense related development efforts bringing their total charges to a little over $ 800 million which is almost $ 1.3 billion pre-taxes.
The largest commercial plane maker in the world as well as a huge defense contractor, beat Airbus, their European rivals to win this contract during 2011.
Boeing has been rejecting the estimates of the US Air Force that it would cost at least $ 1 billion more to develop & test plane refueling but this situation has changed over the last year due to unexpected problems.
As per Brigadier General Duke Richardson, who is currently running this program, he was optimistic that Boeing was going to meet its delivery target and that the 1st fully integrated tanker would take off by September just as it was planned.
These additional costs need to be absorbed by Boeing since the US government has capped costs at $4.9 billion under fixed contract terms. The shares of the company were down by 1.1% during afternoon trading.
Boeing has forecasted an $ 80 billion market as far as plane refueling is concerned. Airbus had earlier won the tanker competition in South Korea.
