An aside before getting into the heart of this post: the following was sent by a Wall Street analyst upon hearing the news that Boeing will lose $300m on the first 18 KC-46A tankers.
KC-46A over-runs. In the movie Casablanca, the Police captain proclaims; “This café is closed; I’m shocked, shocked to find out there is gambling here.” A waiter then hands him his Roulette winnings. We are equally shocked to read reports that BA likely underbid the KC-46 contract. BA’s poor performance on the 767 tanker program and aggressive KC-46A bid drove us to include a nearly $1bn EMD contract over-run in our estimates, which are unchanged. We maintain our Buy rating and $92 target.
Now for the rest of the story, as they say.
While there remains much uncertainty within Boeing and the industry over what Boeing will do about a new airplane–a 737 re-engine or an entirely New Small Airplane (NSA), and if an NSA, what will this look like–states interested in building the NSA also anxiously await Boeing’s decision.
Washington State is the location for building the 737 and having lost the 787 Line 2, it doesn’t want to lose the NSA. The governor has already appointed a task force under the name Project Pegasus to plan the campaign and strategy to be sure the NSA is built here. Other states probably are already planning their strategies, though none has announced anything that we’ve seen.