Friday 22 September 2017

Boeing responds to Trump tweet that wiped $1bn off its stock value

Donald Trump has put Mitt Romney through a very public audition process
Donald Trump has put Mitt Romney through a very public audition process

Zlata Rodionova

Boeing has responded to President-elect Donald Trump’s after he criticised the company over the cost of a new Air Force One plane, allegedly worth more than $4bn.

The aircraft manufacturer revealed that its current contract with the Air Force is actually for $170m.

Earlier in a tweet, Mr Trump said costs for the new plane were expected to reach $4bn and called for the order to be cancelled.

Boeing shares fell just under 1 per cent minutes after the tweet – down from $152.16 to $149.75 per share. The company later recovered those losses and ended the session about flat.

“We are currently under contract for $170m to help determine the capabilities of these complex military aircraft that serves the unique requirements of the President of the United States,” Boeing said in statement.

“We look forward to working with the US Air Force on subsequent phases of the program to deliver the best planes for the president at the best value for the American taxpayer,” the company added.

Boeing won a contact in January to start working on a new fleet of government aircraft.

Read more: Trump wipes $1bn off Boeing's stock market value with one tweet - and White House says he's got it wrong

Commenting on Mr Trump's tweet, Richard Aboulafia, an aerospace analyst at Teal Group told Bloomberg: "This is what an Air Force One costs,"

"There have been no cost overruns. The ability to fly the president during a war is fundamentally expensive."

Mr Trump's tweet about Boeing comes days after chief executive officer Dennis Muilenburg called on him and Congress to ensure that US companies have the tools to compete in a global economy.

Press Secretary Josh Earnest told reporters that Mr Trump's remarks "do not appear to reflect arrangements" made between the aircraft manufacturer, Boeing, and the US Air Force.

He added that Americans would expect that future presidents would benefit from upgrades to Air Force One.

The budgeted costs for the Air Force One replacement program are $2.87 bn for the fiscal years 2015 through 2021, according to budget documents. However, the production contract has not yet been awarded to Boeing.

In September, Boeing won approval from the US government to sell 109 planes worth $17.6bn to Iran Air.

Previously, Boeing and other American companies had been restricted from doing business with Iran due to US sanctions against the country.

Independent News Service

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