It seems these inflationary times have taught Boeing CEO Dave Calhoun a lesson about fixed-cost contracts. He may have also learned a thing or two about negotiating with Donald Trump. Four years after Boeing agreed to convert two 747s into suitable Air Force Ones, Calhoun openly regretted the deal in a call with investors. Per Politico, "Without naming the former president, Calhoun characterized the $3.9 billion contract ... as a 'very unique negotiation' that Boeing probably should not have taken."
He went on to explain that the nature of the $4 billion deal means the company must absorb all the unforeseen costs associated with the pandemic and the general inflationary storm that has developed since 2018. Boeing initially tweeted (perhaps naively) in February of that year that "Trump negotiated a good deal on behalf of the American people." CNBC reports that Boeing has so far lost some $1.1 billion on the deal—including a $660 million charge in Q1 of 2022—and Calhoun warned that more pain could be on the horizon.
The deal was struck by Calhoun’s predecessor, Dennis Muilenburg; he retired in late 2019, about a month before the first traces of COVID-19 started making headlines. Fox News quotes Calhoun as saying, "I will have a very different philosophy with respect to fixed-price development ... I don't expect, and I hope never to contribute to that issue." Nevertheless, he promised investors and any American people who happened to be listening, "We’re going to deliver great airplanes." (More Boeing stories.)
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