washingtonpost.com
Boeing: US gets the tanker it wanted, nothing more

By JOSHUA FREED
The Associated Press
Wednesday, March 23, 2011; 4:40 PM

-- A Boeing executive said on Wednesday that the Air Force will get the tanker it ordered - and no more.

Boeing Co. won the competition to build 179 planes under a contract worth at least $35 billion. Most of the Pentagon's costs will be fixed, rather than traditional defense contracts in which companies pass along unexpected expenses.

Boeing chief financial officer James Bell told analysts on Wednesday that Boeing will strictly adhere to the requirements in the bid.

Boeing believes it can make a plane "that meets the requirements as we proposed, and that's all we're going to build," Bell said.

He said Boeing will tell the government that this contract is different than ones where costs are passed along: "You don't get to help. You get to accept what we said in our proposal we will build. And we're going to be very, very disciplined in managing the statement of work and the requirements. Because that's what happens on development programs normally, is that you start seeing things, and you want to make things better, or you want to do things differently, but today's contracting environment with the government will prevent that from happening."

Governments around the world, including the U.S., have been including defense in efforts to cut spending. Bell said the tanker contract reflects the more austere approach, although he said Boeing expects to be able to turn a profit on it. Boeing won the contract after a years-long struggle against European Aeronautic Defence and Space Co.

Bell said Boeing is looking overseas for growth of its defense business.

"We've seen more opportunity for our defense products internationally than we've ever seen in the history of our company," he said.

Bell also said Boeing is considering raising production rates on its 737 passenger jet to 42 per month. It has already announced plans to get to 38 per month by mid-2013. Boeing has orders for more than 2,100 of the planes, including four more for which Israeli carrier El Al signed a contract announced on Wednesday. Bell said it would take seven years at current rates to deliver all the 737s on order.

Shares of Chicago-based Boeing rose 87 cents to close at $72.72.

© 2011 The Associated Press