Boeing’s C-17 on budget chopping block again

Reuters has this report that the FY2011 defense budget once again proposes chopping the Boeing C-17 from procurement.

The C-17 has been cut from several successive budgets, with Boeing and its supporters able to override this in Congressional earmarks.

We believe the Pentagon is in error for its repeated attempts to cut the C-17 procurement. With two wars and now the Haitian humanitarian effort straining the C-17 fleet, it is inevitable that more of these aircraft will be needed sooner than later. We support continued effort on the part of Boeing to maintain this production line and sell this aircraft to the USAF.

10 Comments on “Boeing’s C-17 on budget chopping block again

  1. Just because the USAF didn’t put the C-17 in its budget doesn’t meant they don’t want any more. Would you put something in your budget if you knew that you would still get it even if you left it out?

  2. Scott – I agree it makes sense to continue trickle acquisiton of the C-17.
    All the non-recurrings and infrastructure are long since paid for so you’re only buying the aircraft themselves now, early build aircraft are starting to tire and can be laid up at AMARG before they’re totally knackered, and at the same time the US Govt would be supporting the last remaining large military aircraft production line in the US!

  3. Scott I also agree with you about continued funding for the C-17. Luckily, Congress and most of the USAF brass also agree, for exactly the reasons you cited. With the White House getting that huge black eye from the citizens of the former Peoples Republic of Massachusetts, perhaps they’ll get the hint on this program as well. I also believe that export orders will increase substantially with continued A400M problems.

  4. The real decision made be made in Euroland . . . if they kill off the A400 then the demand for the plane might not be dependent on the USAF.

  5. C-17 production will suffer reduction to the absolute minimum (only to prevent it from dying completely).
    747-8F + I production will be killed in one or two years from now, but only after incurring heavy losses. The 747-8 program will never be profitable. The 747-8I didn’t meet market needs from the start, and now also the F version is going to lose its market. There are lots of 747-4 retiring now from the passenger service, and airlines will chose to sell them cheap to freight carriers instead of parking them in the desert. Freight carriers will convert them into freight aircraft. Thus, demand for the 747-8F will even be too low to pay for its development costs.
    Rigor mortis has already set in for the 747-8 program and we are now seated next to the ring to observe its decease.

  6. The entire 747-8 program has a backlog of 108 aircraft as compared to 177 for the A380. This is over 60% of the A380 total for a program that costs about 1/10th of what the A380 costs. The 747 production base was amortized a long time ago. The much more costly A380 is likely to disappear before the 747-8 given the dismal economics of the VLA market. There is only room for a very cheap low cost airplane in this market. Can the the A380 make money being produced at a rate of 1 to 1.5 a month? Boeing seems to feel the 747-8 can but the A380l, never!

    • Apparently, the R&D expenses for the 747-8F/I is “comfortably” exceeding the 4 billion USD mark. Boeing last year booked a USD 685 million charge for the 747-8 program, acknowledging the company will lose at least that much in producing the aircraft based on its current projection of firm sales. This comes atop of the aforementioned R&D expense. So, it’s safe to assume that the 748 programme real costs are closer to one fourth that of the “programme” costs for the A380. Finally, the “belief” that the A380 “is likely to disappear before the 748” is merely wishful thinking. 😉

  7. Dear John,
    You made some points worth considering, but this one is outright wrong: “The much more costly A380 is likely to disappear before the 747-8 given the dismal economics of the VLA market.”

    Airlines do not decide for/against buying an aircraft by reading its price tag. They calculate the approximate cost per passenger/container unit mile over the entire service life of an aircraft, which is also containing the fuel, maintenance and running costs.
    Those calculations are freely available and I recommend you fetch your calculator and compare the 747-8I and the A380 along their respective costs in this regard.

  8. Dear Evin,

    Airlines do not decide on whether or not to continue producing an aircraft. Boeing and Airbus do. The point was that Boeing could likely make a profit of a lower production rate than Airbus could, you are more than free to dispute this point, but I wasn’t saying CASM determines everything. Also, you are ignoring the fact that the 747-8 owns the freighter market. Another factor to consider is residual value of an aircraft. After 20 years of service the residual value of an A380 is nil, there is no market for A380 freighters, the market for 747 freighter’s is quite healthy. Also, cost per passenger/container mile vary greatly depending on the aircraft is configured. The 747-8 beats the A380 decisively in the container costs per mile. However, it may suffer when compared in passenger costs a little, but again that is only assuming that an A380 is configured for around 550 pax which few are. In real world service who has the better numbers? There really is no definitive answer on this.

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