Boeing warns again on C-17 production survival

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Boeing's C-17 production line faces another pivotal decision in upcoming budget negotiations between the two houses of the US Congress.

The survival of the C-17 line after mid-2011 depends on a compromise with at least eight aircraft in the final fiscal year 2010 defence spending bill, says Tom Dunehew, Boeing's vice-president for business development for global mobility.

Since 2007, Boeing has counted on both Congress and foreign customers placing orders in the absence of new funding requests by the US Air Force.

In 2009, for example, Congress added funds to buy eight C-17s in the FY2009 war supplemental bill. NATO is buying two more. Meanwhile, Boeing is in negotiations with other foreign governments to purchase five more, with the United Arab Emirates identified as a potential buyer of four. The source of the possible fifth order has not been revealed.

But foreign sales for the C-17 could dry up in FY2010, which begins on 1 October.

Qatar received its last of two aircraft on 10 September, and has not yet exercised an option for a further two. India, meanwhile, has downselected the C-17 for a requirement to buy 10 airlifters, but moving to contract award remains a distant objective.

 
© Michael Gail/Boeing
Boeing has delivered Qatar's second, uniquely liveried C-17

That situation leaves the US government as Boeing's only likely C-17 buyer in FY2010.

Boeing needs a minimum order of eight aircraft to justify its business case for extending C-17 production by another full year, Dunehew says. To keep aircraft costs affordable, any order smaller than eight aircraft would have be tacked on to an accelerated production plan for FY2009, he adds. Boeing later clarified that it officially needs orders for 12-15 aircraft per year to continue production.

A conference committee composed of members of both houses of Congress are meeting over the next few weeks to decide the final number.

The Senate version of the FY2010 defence spending bill proposes to add funds for 10 C-17s, but a different version of the bill approved by the House of Representatives proposes to add only three.

If the final bill "has only three, that would create a real problem for us", Dunehew says. Boeing would simply add the three aircraft to the FY2009 production lot, then shut down the production line, he adds.