The Air Force announced on August 18 that it had awarded the Boeing Company a $2.8 billion contract for the first two production lots of the KC-46 aerial refueling tanker. With development issues now behind it, Boeing will begin delivering the first of 179 planes to the service in about a year. Unfortunately, the company will need to absorb about a billion dollars in after-tax expenses it hadn’t expected because development cost more than planned. However that is a small price to say for a program that might ultimately be worth $200 billion in revenues. Not only is Boeing likely to build a lot more than 179 tankers in the end, but it will have the inside track on sustaining them during decades of operation. It thus has preserved a 60-year franchise in aerial refueling, in the process blocking rival Airbus from becoming a major supplier to its most important military customer. Militarized jetliners are looking like a core offering for Boeing’s defense unit through mid-century and beyond. I have written a commentary for Forbes here.
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