Boeing Drops Price, Solves 'Combi' Problem

A Reuters story says that, for reasons unknown (unexpected competition from Airbus? unbridled patriotism?), unnamed DoD officials, "said Boeing officials had agreed to trim the price of each 767-200ER aircraft to around $136 million, bringing the overall price of the lease deal down to around $14 billion from $17 billion. The revised deal calls for the Air Force to purchase the tankers at the end of the six-year lease term for an additional $3.5 billion, down from $4 billion in the original deal."

The military, hoping to assuage cashflow problems, has turned to aircraft leasing -- 11 new 767-based tankers will soon join the fleet of 545 (707-based) KC-135s -- as one useful strategy. The effect of long-term debt (on a purchase deal) would be moved to a new line on the balance sheet, and the cash outlay, year-to-year, could also be reduced.

Government deals, immune from IRS prying and interference, can use more-creative ways to save money than private-sector businesses; and their motivations and constraints are also considerably different. A lease, for government, could be the wave of the future.

There's another twist to the newest 767 tanker deal, too: unlike recent iterations, the machines would be configurable to convert from tanker to transport duty and back, rather than the so-called "combi" machines, which would carry some cargo and/or troops, but less fuel. Apparently, someone at DoD figured that the likelihood of a mission that would require troops on an aerial refueling route was small enough that a more-specialized aircraft would answer the need.

FMI: www.dod.gov, www.boeing.com