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Pentagon Report Finds Fault With C-17

Aerospace: Military transport falls short in key areas, study says. It could hurt plane's commercial potential.

March 07, 2001|TONY CAPACCIO | BLOOMBERG NEWS

WASHINGTON — The U.S. military is having increasing problems with its top transport aircraft, Boeing Co.'s C-17, including unreliable landing gear, inaccurate navigation software and shortages of spare parts, according to a new Pentagon report.

The number of C-17s grounded for repairs and modifications is "now consistently below the command standard" and "has become a significant concern," said the Pentagon's Office of Operational Test and Evaluation.

The assessment comes as Boeing and the Air Force try to market civilian model C-17s to commercial freight companies. Boeing wants the new business to ensure steady production; the Air Force hopes it will allow Boeing to set lower prices on its military C-17. This report may hurt that effort, an analyst said.

"The consistent message from the Air Force and Boeing has been one of a tremendous C-17 'success story,' so to read this stuff at this stage of the program raises doubts about the extent the aircraft has improved and matured," said Richard Aboulafia, a defense analyst with the Teal Group, a Washington-based market forecasting group.

The C-17 is produced by Boeing's military aircraft division in Long Beach, which accounted for $12.2 billion of the company's overall $51 billion in 2000 revenue, second only to the commercial aircraft sector, which had $31.2 billion in revenue.

"There are a lot of engineering changes and the C-17 is still a relatively new aircraft, so there is still time to fix a lot of problems. But unless Boeing and the Air Force take actions, they are going to find the market will react negatively, and the biggest market of all is the U.S. Congress," Aboulafia said.

The Air Force and a Boeing spokeswoman said the test report outlined a compilation of issues, some of them years old.

"The issues are in various stages of either having been fixed, being fixed, awaiting funding or spare parts or final engineering analysis," said Boeing spokeswoman Debra Bosick. "We will continue to work with our customer to improve the aircraft, both on the production line, in future lots and to retrofit those already fielded," she said.

The C-17 entered full production in November 1995 after a development phase under then-McDonnell Douglas Corp. that was so rocky the Pentagon considered canceling the program. The Air Force has taken delivery of 70 of 120 aircraft it has on contract and is considering budgeting for more starting in fiscal 2003.

The C-17 production line is slated to close in 2004 if Boeing gets no more orders.

Officials at the Air Force Air Mobility Command, which oversees the C-17 fleet, said they are reviewing the report and had no comment.

The C-17 fleet falls short on two military standard measures of readiness, the Pentagon report said. The first is the so-called mission capable rate, or percentage of time the aircraft is available to perform at least one of its assigned missions.

The Air Force standard is 87.5%. The C-17's rate last year was between 78.6% and 85%.

The second readiness benchmark, called fully mission capable, measures the percentage of time the aircraft is available to perform all its assigned missions.

Already below Air Force goals set in 1993 and revised in 1998, the C-17's fully mission capable rates were "initially trending upward. However, due to recent failures of some key components, the trend has reversed," the report said.

Shares of Seattle-based Boeing closed up 22 cents Tuesday at $62.13 on the New York Stock Exchange.

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