C 17 Airplane

Although Pentagon officials have denied for more than a year that the government had a plan to bail out financially troubled McDonnell Douglas, handwritten notes made by a key Air Force general appear to show that a detailed rescue was discussed in 1990. The notes were taken by Maj. Gen. Michael Butchko, the former Air Force program manager for McDonnell's loss-plagued C-17 cargo jet program, at a crucial Oct.

McDonnell Douglas executives asserted Monday that their troubled Air Force C-17 cargo jet program in Long Beach is finally making better progress and that the company will attempt to fly the first aircraft as early as next March, making up for a small part of the delays that had earlier dogged the program. The C-17 is among major production and development programs that have fallen behind schedule, causing serious financial trouble at the firm's Douglas Aircraft unit.

Boeing Co. said Friday that it had taken the first steps toward closing its sprawling C-17 assembly plant in Long Beach, a shutdown that is expected to be completed by the middle of 2009 unless substantial new orders are placed for the giant military aircraft. Closing the plant, which employs about 5,500 workers, would deprive Long Beach of its largest private employer and deal a blow to hundreds of subcontractors in Southern California and around the nation that supply parts for the C-17.

Boeing Co. has offered to build 60 more C-17 military transports for the Air Force for $149 million apiece, 15% less than the price in the current contract. Stu Thomson, Boeing's vice president for business development, said that the aerospace company made the unsolicited offer Tuesday to extend by four years the production run of its top military aircraft program, now scheduled for its last delivery in 2003.

The outlook for 8,000 Boeing Co. employees who assemble the C-17 military transport in Long Beach brightened Friday when a top Air Force official said the Pentagon's review of its future needs will probably recommend building more than the 120 C-17s already on order. "We're looking forward to it actually happening," said Boeing spokesman George Sillia in Long Beach, noting that "we've been saying for years" that the Defense Department requires more of the "airlifters."

The U.S. Senate took the first step Thursday to keep open the C-17 production line in Long Beach, calling for the Air Force to acquire enough of the cargo planes to keep the plant running until 2012. By an 89-8 vote, senators urged the Air Force to order 42 additional C-17s and provided a compromise that would allow the military to cut its acquisition rate from 16 planes a year to six.

While their Boeing Co. colleagues across the runway in Long Beach await news about a possible new jet assembly line, workers on the C-17 military transport program see a bright future. A new report on British military needs specifically mentions the C-17 in several places--an endorsement that seems to ensure that the local plant will get its first overseas orders for the airlift plane.

Only a year after the Pentagon rebuked three Air Force generals for secretly bailing out McDonnell Douglas Corp., new evidence is prompting questions about whether the firm is again receiving unusual financial assistance from the U.S. government. Sen.

After long insisting that its C-17 cargo jet program would not lose money, McDonnell Douglas Wednesday posted an $80-million pretax charge against the program in its first quarter, ended March 31. But the company's commercial aircraft business posted a healthy gain. The St. Louis-based firm had net earnings of $52 million, or $1.34 a share, down from $58 million, or $1.50 a share, in the period last year. At $4.14 billion, sales fell 2% from $4.24 billion last year.