December 20, 2018 / 10:07 PM / 5 months ago

Exclusive: U.S. Air Force to take delivery of Boeing tanker by year end, sources

WASHINGTON (Reuters) - The U.S. Air Force will take its first delivery this month of the long-delayed KC-46 aerial refueling tanker made by Boeing Co (BA.N), people familiar with the process said.

A Boeing Air Force KC-46 aerial refueling tanker is parked near Boeing Field in Seattle, Washington, U.S., March 26, 2018. REUTERS/Lindsey Wasson

Final paperwork has been moving through the Pentagon’s chain of command in recent days, signaling that government concerns about the problem-plagued jet have been addressed after a multi-year delay, the people said.

The delays and fixes for the program has been costly for Boeing, which recorded $176 million in additional charges on the KC-46 tanker in the third quarter alone. This brought the total pre-tax cost of the program to more than $3 billion.

Delivery means Boeing could now begin to reverse what has been a steady stream of financial losses related to the KC-46 program, and a major public relations headache for the world’s largest aircraft maker. The acceptance will be final when Defense Secretary Jim Mattis signs off on the delivery.

The Air Force currently plans to buy a total of 179 of the tankers, and could receive them at a pace of about three jets per month to McConnell Air Force base in Kansas.

In September, Boeing said the KC-46 completed the U.S. Federal Aviation Administration certification, nearly three years after the planemaker commenced testing for the certification.

Boeing landed the $49 billion contract in 2011 to build the tankers based on 767 commercial jets.

“The KC-46 is a top priority for the Boeing Company, and we have the best of Boeing working to ensure the U.S. Air Force gets their tankers as quickly as possible,” Boeing said.

An Air Force spokeswoman said “We are working with Boeing to resolve deficiencies and move towards acceptance and delivery.”

Problems with the jet, which refuels other aircraft mid-air, revolved around the mechanism for delivering fuel and the operation of that device, known as a “boom”.

Those issues have been mitigated in the eyes of the Air Force, the people said.

Boeing previously missed a forecast that the aircraft would be delivered last year, as the planemaker was trying to get airworthiness certifications and complete a flight test program.

Reporting by Mike Stone; Editing by Alistair Bell

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