Boeing Takes $536 Million Charge On Air Force Tanker BA

That after-tax charge has an impact of about $.77 a share for Boeing (NYSE:BA) stock.

Boeing Co would revise its full-year profit forecast due to a $536 million after-tax charge from higher costs to develop a new US Air Force refueling tanker.

This is the 2nd time that Boeing is taking a charge on this tanker which is among the biggest defense related development efforts bringing their total charges to a little over $ 800 million which is nearly $ 1.3 billion pre-taxes. He said Boeing aimed to keep the program on track for a first flight of the new aircraft before the end of the year.

Boeing must absorb the additional costs of development of the program since US government costs are capped at $4.9 billion under a fixed-price contract.

The largest commercial plane maker in the world as well as a huge defense contractor, beat Airbus, their European rivals to win this contract during 2011.

Revenue and cash forecasts for the year will remain unchanged, Boeing said.

Boeing said it will update its earnings guidance when it announces Q2 results on Wednesday. Losses on the 787 continue to rise, though the pace is slowing as Boeing improves the production system.

As per Brigadier General Duke Richardson, who is now running this program, he was optimistic that Boeing was going to meet its delivery target and that the 1st fully integrated tanker would take off by September just as it was planned.

The KC-46 will have a fly-by-wire refueling boom based on the system the Air Force uses on the KC-10 Extender tanker, plus a centerline drogue system and wing aerial refueling pods.

It said testing of non-fuel system components is 90 percent complete, and it is making progress on its overall ground and flight test program. The program involves 179 aircrafts and a budget of $49 billion with an initial delivery of eighteen tankers.