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The next aircraft to carry the President of the United States has yet to be built, but it already is an aircraft that has captured a lot of attention since US President Trump called the aircraft too expensive. Since then, Boeing (BA) and Trump have gotten closer and the replacement of the Boeing VC-25A aircraft that operate as Air Force One when the president is on board didnt seem so much of a hot subject anymore.

Source: here

The latest news on the Presidential Aircraft Program is that Boeing might use two Boeing 747-8I aircraft that have already been built as the base of the new VC aircraft. In this article, I will have a look at the background of the aircraft and explain why there is no reason to be skeptical about this construction.

When the news broke that the next Presidential Aircraft might already have been built, I marked this as ironic. The aircraft that might be used as a base for the next Presidential Aircraft are the Boeing 747-8I aircraft with line numbers 1519 and 1523. Initially these aircraft were destined for Russian airline Transaero, but the airline collapsed before it could take delivery of any of the superjumbos and Boeing 747 jumbos it had on order.

Source: http://www.boeing.com

Given the cold relation between Russia and the US, it might be seen as somewhat ironic that the next Presidential Aircraft will be two aircraft that were once destined for a Russian carrier. Some, however, we're seeing things differently, even going as far as saying that it is a surprise that the US did not buy the aircraft directly from the Russians.

This can obviously be linked to Trumps campaign team potentially having been too close with the Russians. Everybody has their thoughts and say on that, but the fact is that these aircraft have never been property of a Russian airline.

The aircraft with line number 1519 is almost a year old while the aircraft with a line number is little over year old. Both aircraft have never flown in revenue service and as a matter of fact neither aircraft has ever been in Russian hands. Since Transaero collapsed before it could take delivery of the airframes, the delivery slots have been assigned to Transaero but the actual aircraft have never been a property of Transaero and have been property of Boeing ever since they rolled out of the factory. Both aircraft have been stored in Victorville since February 2017.

So as much as people want to come up with scenarios to link this aircraft to Russia, there is very little reason to do so. At some point Iran, another country the US does not have a warm relation with, seemed to be taking up the ex-Transaero jets, but this did not come to fruition.

Since Boeing does not see a role for the passenger variant of the Boeing 747-8I, it is unlikely that the aircraft Boeing currently has in storage will find a customer any time soon. With that in mind offering these jets to the USAF is a step that does make a lot of sense for Boeing.

Source: Defense One

Boeing could have built new jets and it would fill some delivery spots, but with little to no market appeal for the current Boeing 747-8I chances of selling aircraft that are built to the specifications of other airlines are low and Boeing would be stuck with these airframes for a while.

I expected Boeing to build new aircraft for the VC-25A replacement, but the USAF taking white tails over newly built aircraft also is reasonable, but not because of possible discounts. I deem it highly unlikely that Boeing will throw in significant additional discounts to sell these stored aircraft. Any discounts the USAF gets will likely be offset by the costs that Boeing will have to refurbish the aircraft. So, my guess would be that the USAF will be paying at least the price of a new Boeing 747-8.

The Government Accountability Office has estimated the costs for procuring two Boeing 747-8 to be $282.2 million or $141.1 million per airframe. The Boeing 747-8 had a list price of $378.5 million in 2016, so the discounts would be around 65% which is not uncommon for an aircraft with low market appeal.

Boeing continues to work with the USAF on cost efficient solutions, but on the procurement of the Boeing 747-8I there seems to be little to gain and I think using the white tails is more beneficial to Boeing than it is to the American tax payer.

There is absolutely no reason to criticize the current administration as Boeing might use aircraft once destined for a Russian airline. The aircraft are likely to support presidential transport missions starting in 2024, so it will be an aircraft that the next president of the United States will be using primarily.

The fact that these aircraft were once destined for a Russian carrier has little to no meaning. The aircraft have always been property of Boeing and it is in the companys best interest to place these aircraft with customers. For the jet maker delivering these aircraft to the USAF is a very good solution, since these aircraft in particular and the Boeing 747-8 program have low market appeal.

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Disclosure: I am/we are long BA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

See the original post here:
Boeing 747: Russia, Iran Or Presidential Aircraft? - Seeking Alpha