Boeing reports new $275M charge on KC-46, overruns exceed contract

In its Q4 2020 earnings Boeing reported a new $275 million charge on KC-46 Pegasus, the troubled aerial refueling aircraft.

With this addition, cost overruns on the KC-46 program now exceed $5 billion. The initial cost of the contract with the United States Air Force was $4.9 billion.

According to the contract, Boeing is responsible for covering all the cost overruns and cannot increase the price paid by the USAF.

The troubled tanker added to the company’s massive $8.42 billion loss in the last quarter of 2020, piling up on top of three previous calamities – the COVID-19 pandemic, the 737 MAX crisis, and delays to the 777X.

According to the company, the majority of KC-49 related problems this quarter were due to pandemic-induced disruptions. In mid-2020, the company claimed to have solved technical problems with the aircraft and received the withheld USAF payment for delivered units.

Nevertheless, total cost overruns in 2020 were larger than any previous year.

The majority of them were due to numerous deficiencies that plagued the aircraft and led to Boeing having to spend billions of its own dollars on the program.

Despite the troubles, USAF recently increased its order of the KC-46, which now totals to almost 100 planes. Numerous other countries have showed their interest in the aircraft too.

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