Boeing says to fund C-17 production itself
NEW YORK, April 11 (Reuters) - Boeing Co (BA.N) said on Friday it would use its own money to carry on production of its C-17 military transport plane, despite a lack of firm new orders, in the expectation that Congress will ultimately fund further U.S. Air Force purchases of the plane.
The future of Boeing's C-17, the workhorse airlifter for the U.S. armed forces, has been in doubt for some time as the Pentagon has refused to add funding for planes beyond the 190 it has on order, and international sales have been weak.
Citing Congressional support for more C-17s, Boeing said it was now funding production of 30 extra planes, twice the amount that the Air Force has been pushing for.
"Because of continued bipartisan congressional support, and increasing public indications that the U.S. Air Force has requirements for additional C-17s, Boeing has extended company funding for production parts to now include a total of 30 new aircraft beyond the 190 currently on contract until June, 2008," Boeing said in a statement on Friday.
Earlier this month, Gen. Norton Schwartz, who heads the U.S. Transportation Command, said the Department of Defense needed 205 C-17s -- 15 more than are currently planned -- to meet its own military requirements.
Pentagon acquisition chief John Young has rejected the need for any more of the transport planes, calling the desire for more C-17s an Air Force "dream list".
However, Congress has added 18 C-17s to the defense budget over the past two years to keep the Boeing C-17 production line rolling and safeguard jobs.
The Pentagon did not include any funding for the plane in the Air Force part of its budget request for fiscal 2009, but Rep. John Murtha, a Pennsylvania Democrat and chairman of the House Appropriations Committee defense subcommittee, has vowed to add more C-17s to the war budget for 2008.
Last March, Boeing said it was preparing to wind down the C-17 production line by mid-2009, stopping the procurement of parts for planes with no funding, because of the lack of new orders. It reversed that decision three months later, saying it would fund production of ten more planes itself.
Boeing said its decision to invest its own money on the C-17 line was entirely at its own risk and would have no negative impact on the U.S. government. It said it had not consulted with the U.S. Air Force on the decision.
Boeing is especially keen to carry on making planes for the U.S. military after it lost out to rival Northrop Grumman Corp (NOC.N) and Europe's EADS (EAD.PA) in a contest to build $35 billion worth of refueling tankers for the U.S. Air Force in February. Boeing has since challenged the award of that contract with the government.
The company has so far delivered 171 C-17s to the U.S. military, out of the total 190 on order, from its plant in Long Beach, California. (Reporting by Bill Rigby; Editing by Gary Hill)
