Boeing is studying a further round of cost-cutting measures for the C-17 transport in 1998 as part of efforts to generate further sales to the US Air Force as well as to potential export customers such as Japan, Saudi Arabia and the UK.

The unit fly-away cost of the C-17 is around $173 million in 1996 dollars, the year when the multi-year procurement (MYP) agreement was signed with the US Department of Defense. This covered the purchase of 80 C-17s over seven years, and allowed the aircraft's manufacturer McDonnell Douglas (now part of Boeing) to order long-lead items for sustained manufacture of the aircraft, thus helping reduce costs significantly.

Stu Thomson, Boeing's airlift/ tanker programmes business-development vice-president, says: "Now we are looking at ways to go aggressively beyond that - we think we could do a lot better. We are not talking about getting lower prices on the 120th aircraft either, but some time before that."

The manufacturer is on contract for 120 aircraft, but is expected to receive more funding for 15 more for the USAF Special Operations Forces, which would be procured in 2003 and 2004.

In addition, it sees prospects for as many as 50 foreign sales, not including commercial MD-17 derivatives. Although no specific cost targets have been revealed, it is believed that unit costs of as low as $150 million have been identified.

The Royal Air Force is interested in operating about six C-17s to provide a strategic-airlift capability.

"The reductions are made possible by increased productivity, increased automation and supplier performance-but it isn't easy," says Thomson. "We cannot be content with the MYP. If we do better, the Government and the contractors do better and this adds to the competitiveness of the product."

Boeing's optimism over a new round of unit-cost reductions coincides with the recent signing of a one-year $160.5 million USAF "flexible-sustainment" contract covering C-17 logistics support, heavy maintenance, painting and some inspections.

The full potential of the contract could be worth up to $5.6 billion over eight years if the first phase is a success. Boeing says that the contract will reduce costs for itself and the USAF because it will avoid duplication and simplify the aftermarket support of the fleet.

"The biggest spin-off is that Boeing will manage all spares and support, which means for potential customers such as the RAF, Japan Air Self-Defence Force and Royal Saudi Air Force that they won't have to set up anything other than a window through which they will tap into Boeing's worldwide support set-up," says Thomson.

Source: Flight International