Boeing's Air Force One Program Gets a New Look: Cost and Schedule Risks

Donald Trump flew on a new Air Force One for the first time Wednesday, though the aircraft was not the Boeing 747 the White House ordered but a luxury jet gifted from Qatar. The flight reignited questions about the timeline and cost of Boeing's VC-25B program, which is years behind schedule and billions over budget.

The president's long-standing interest in a redesigned presidential plane dates to his first term. A model sat on his desk in the Oval Office. The actual replacement program, however, has delivered only two aircraft in development, with delivery pushed to at least 2027. Boeing took a $2.5 billion charge on the program in 2022 and another $482 million in 2023.

Wednesday's flight on a Qatari-owned Gulfstream G650ER underscored the gap between the desired capability and what is currently available. The White House did not comment on whether the trip was a demonstration of a potential interim solution. The G650ER, built by Gulfstream Aerospace, a unit of General Dynamics, can carry 19 passengers and fly 7,500 nautical miles – half the range of the 747-8 variant the Air Force ordered.

The VC-25B program is a fixed-price contract, meaning Boeing absorbs cost overruns. Defense analysts have flagged the program as a cash drain that will continue to weigh on free cash flow in the company's defense segment. Boeing's defense unit posted a $1.6 billion operating loss in 2024, driven largely by fixed-price development programs.

For investors, the risk is that further delays or redesign requests from the administration could add to the charge pile. The Air Force has already modified the contract once, in 2022, to include new cybersecurity requirements. Any additional scope changes – particularly to the interior or communications suite – would likely trigger another charge.

The market has priced in a slow bleed. Boeing shares are down 12% over the past 12 months, underperforming the S&P 500. The Air Force One program accounts for a small fraction of Boeing's total revenue but represents a sizable liability on fixed-price contracts. A resolution date remains unclear. The Pentagon's acting comptroller testified in May 2024 that the cost of the program had reached $5.3 billion.

A spokesperson for Boeing declined to comment on the president's flight or the program's current timeline. The Air Force has not published an updated schedule since the last restructuring in 2023.