Boeing approves one more year of C-17 production on anticipated demand

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Boeing has started building as many as 12 more C-17 airlifters in anticipation of signing new orders from international customers, possibly extending the Long Beach, California production line by more than a year.

The company's second quarter earnings report filed with the US Securities and Exchange Commission notes that as of 30 June $620 million is obligated in inventory and potential termination liabilities for the next batch of aircraft.

The note confirms that Boeing leadership decided in the second quarter to continue building C-17s beyond the aircraft already on contract for delivery through September of next year.

"As in the past, Boeing is investing company funds on long-lead components to protect the continued affordable production of C-17 aircraft in anticipation of additional orders from international customers," the company says in a statement to Flightglobal.

Boeing has confirmed orders to continue building C-17s into the third quarter of 2014. If it builds all 12 C-17 as unsold "white tails", production could continue into the fourth quarter of 2015, based on current output of 10 per year.

Boeing says it is in discussions with a range of new and existing customers, although previous reports have linked the C-17 to additional orders from India and Australia and possible new orders from Saudi Arabia and Singapore.

The C-17's supply chain is already starting to build the unclaimed hulls, as production system requires an 18-month lead time for early parts and materials.

David Kornblatt, chief financial officer and executive vice president of Triumph Group, which owns C-17 supplier Vought, said in a recent teleconference with analysts that production has already begun on the next batch of aircraft.

"Now we've been given authorization to go ahead and build airplanes," Kornblatt says. "What we hear from [Boeing] is that they're confident that the next [block of 10 aircraft] is going to get sold."