Boeing Running Low on Margin for KC-46: Boeing promises it is still on track to meet a key August 2017 deadline on its KC-46A Pegasus tanker, which will provide the backbone of America's future air refueling efforts for decades to come.
But with the revelation of its latest design challenge, the world's largest aerospace company is running thin on margin left to hit that milestone.
As part of its second quarter earnings report, Boeing confirmed that it had encountered an issue with the integrated fuel system on the tanker, a militarized version of its 767 commercial flight.
Because the Air Force's liability for the engineering and manufacturing development phase of the tanker program is capped at $4.9 billion, anything over that is paid for directly by Boeing. The work to fix the fuel system issue came with a pre-tax charge of $835 million. When combined with a $425 million pre-tax charge from last summer's wiring issue, the company has now racked up $1.2 billion in pre-tax overages on the program.
