U.S. President Donald Trump has reached an agreement with the Boeing Co to provide two Air Force One planes for US$3.9 billion ($5.3b), the White House said on Tuesday.
"President Trump has reached an informal deal with Boeing on a fixed-price contract for the new Air Force One Program,: Deputy Press Secretary Hogan Gidley told Reuters. He said the contract will save taxpayers more than US$1.4b, but those savings could not be independently confirmed, according to the Daily Mail.
Trump has said Boeing's costs to build replacements for Air Force One aircraft - one of the most visible symbols of the U.S. presidency - were too high and urged the federal government in a tweet to 'Cancel order!'
The White House now says the original cost estimate was actually over US$5b for the two airplanes and development program.
Boeing chief executive Dennis Muilenburg met multiple times with Trump to discuss the Air Force One contract, most recently last week.
Gidley said the agreement would save the taxpayers more than US$1.4b.
Boeing, in a statement, said it is "proud to build the next generation of Air Force One, providing American Presidents with a flying White House at outstanding value to taxpayers."
"President Trump negotiated a good deal on behalf of the American people," they said.
The agreement includes the two 747-8 aircraft, and the cost of modifying the commercial planes with the equipment needed to support the president, including external stair, large galleys and a secure communications suite.
Earlier this month, the Pentagon released Air Force budget documents for fiscal year 2019 disclosing the US$3.9b cost for the two-aircraft program. The same 2018 budget document, not adjusted for inflation, showed the price at US$3.6b.
Boeing would only have so much room to offer discounts given the high proportion of supplier content on Air Force One, from refrigerators to missile warning systems, Aboulafia said by phone.
The big U.S. defense contractor said the deal includes work to develop and build two planes, including unique items such as a communications package, internal and external stairs, large galleys and other equipment.
As an example of the unusually high costs associated with Air Force One, the Pentagon announced in December that Boeing was given a US$23.7 million contract to design, make and install refrigerators for the president's planes.
The White House said the deal would put Boeing on the hook for cost overruns. In 2011, Boeing agreed to a US$4.9b fixed-price contract with the Air Force for a refueling tanker, the KC-46. Through late last year, cost overruns had reached about US$2.9b in pretax costs.
The Boeing 747-8s are designed to be an airborne White House able to fly in worst-case security scenarios, such as nuclear war, and are modified with military avionics, advanced communications and a self-defense system.
U.S. aerospace analyst Richard Aboulafia said the White House was engaging in "
"There's no evidence of a discount," said Aboulafia, vice president of analysis at Teal Group.