Boeing’s KC-46 military tanker facing $70bn test

Boeing’s troubled new refuelling tanker is about to face its biggest test, the results of which could put the nearly $US50 billion

24th Sep 2015


Boeing’s KC-46 military tanker facing $70bn test

Boeing’s troubled new refuelling tanker is about to face its biggest test, the results of which could put the nearly $US50 billion ($71bn) contract on a steady course — or risk new delays and added costs.

Eight months after it was originally supposed to take to the air, the KC-46 military tanker is scheduled to make its maiden flight as soon as Friday, the Pentagon said. The flight kicks off a series of tests on a single plane over a four-month period.

Chicago-based Boeing already suffered $US1.26bn in overruns associated with the KC-46’s ­development, including an $US835 million charge to earnings in July to fix the plane’s ­design and address manufacturing issues in the fuelling system.

The compressed flight trials will determine whether the plane, a heavily modified version of Boeing’s civilian 767 jetliner, can link up with, and refuel, five different types of US air force, navy, and marine aircraft. An earlier version without refuelling systems started flying in December.

The air force is to decide by April whether to purchase the first batch of tankers. Boeing’s contract calls for it to deliver 18 by August 2017. A spokeswoman insists it will not begin purchases “until all criteria have been met.” The service is “not pleased with the schedule slips,” she said, noting Boeing has exhausted all schedule margin.

A Boeing spokesman said the company was “making good progress” on redesigning the plane’s fuel system components and remains on schedule for the 2017 delivery deadline.

Many problems with the tanker’s fuel system design and manufacturing discovered over the past year are to be fixed by Boeing later in the testing program and were not needed for the April ­decision, officials said.

Righting the tanker project is an early challenge for Dennis Muilenburg, who became Boeing chief executive in July. The fixed-price contract, which puts Boeing on the hook for any cost overruns, could lead to revenue of about $US49bn for 179 aircraft.

Former Boeing executives and engineers say the tanker’s troubles stem partly from changes to Boeing’s defence business in recent years that diminished valuable know-how. It had delivered refuelling aircraft to Japanese and Italian militaries between 2008 and 2012 from a Boeing facility in Wichita, Kansas. Those projects ran years late and over-budget.

“They didn’t do a great job, but they sure learned a lot,” said a retired senior Boeing executive.

Boeing officials hoped those lessons would help avoid similar pitfalls on the KC-46. But Boeing decided to close the Wichita operations in 2012 amid Pentagon belt-tightening and moved the remaining tanker work to the Seattle area, where it builds commercial jets.

Some Wichita tanker managers and engineers moved to Seattle, but others left, retired to went elsewhere in Boeing. Boeing lost some of its “tribal knowledge” that could have helped the KC-46, another former executive said, and it also changed fuel-­system suppliers.

Boeing’s new supplier was Cobham, not General Electric’s Smiths subsidiary, which had ­developed the refuelling systems for the Italian and Japanese planes. That change, said a former tanker engineer who worked on both efforts, sacrificed hard-won institutional knowledge.

Boeing went from a “troubled design that we fixed to a clean sheet,” the engineer said. Boeing said “Cobham is a key part of the tanker team.” A Cobham spokesman declined to comment.

Adding to its woes, a chemical mix-up earlier in the summer damaged the fuel-system plumbing in the prototype tanker.

The craft’s fuel system has long been an issue. An Air Force report in February said Boeing had identified parts that didn’t meet lifespan requirements and would need to be redesigned and replaced. Boeing declined to say if the costs of those redesigns were included in the $US835m. The company last year booked a $US425m pretax charge to fix wiring problems on the tanker.

As Boeing moved deeper into testing the fuel system, design issues with pumps, valves and couplers worsened. In April, another design issue surfaced and inspections also revealed an extensive welding manufacturing issue, according to the Air Force.

Brigadier General Duke Richardson, who oversees the KC-46 program for the air force, said: “I would rather find out about these issues now … than five years from now.”

Shortly after the latest charge was announced in July, Mr Muilenburg named Scott Fancher, a senior jet development executive, to right the tanker program. Boeing says there is a global market for up to 400 of the KC-46s, which could help offset higher initial costs to develop the jet.

General Richardson said parts of the refuelling system still must be validated. “It’s not a lot, but they’re not finished yet. That will not hold up first flight, but it may hold up the (aerial refuelling) demo at the end,” he said. “We’re watching that closely.”

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