Originally Posted by
Preemo
I thought I had read earlier in this thread that Boeing's margins were razor slim on this deal...now they can be profitable with a $2B over-run means they must have 10%-15% profit in their price. In 2017 their operating margin was 11% so it looks like this was a good deal for them from the get go....or accounting magic happening here.
The current contract is to develop and certify the tanker and produce and deliver 18 production aircraft. The margins are razor thin and between the cost over runs and the likely penalties for late delivery, Boeing will almost certainly take a loss on
this contract. The production contract for follow on aircraft does not have such razor thin margins. It will clearly take longer for Boeing to turn a profit on the total program than if the development and initial production program had gone to plan, but absent some huge miss step, Boeing will most certainly turn a profit long term. And not just from support, but from actual production.