BA Boeing Co

By Jon Ostrower 

The Pentagon on Friday cleared Boeing Co.'s new aerial fueling tanker for production, a major milestone as the plane maker seeks to move past delays and heavy financial losses.

The declaration by the Defense Department clears the way for a $2.8 billion initial contract.

The milestone, which was expected in 2015, has slipped several times as Boeing has worked through design and manufacturing issues with the aircraft.

Troubles developing the KC-46 program, which is based on a heavily modified 767 airliner, has generated about $2 billion in write-offs by the plane maker.

"The KC-46 is ready to take the next step," said Gen. Dave Goldfein, Air Force Chief of Staff in a statement. The Air Force said it would award Boeing contracts over the next 30 days for 19 KC-46 aircraft and their spare parts.

Boeing has been flying the tanker with its specialized refueling equipment for nearly 11 months, demonstrating the aircraft's capability passing fuel to Air Force, Marines and Navy jets. It ran into technical issues earlier this year while testing its refueling boom.

That forced a redesign of parts of the system and partially contributed to delayed first deliveries of the tanker by five months, pushing the first 18 jets scheduled arrival to the Air Force to early 2018. The company completed the initial round of testing on the revised design in July, clearing the way for the green light from the Pentagon.

Despite the delays, technical hiccups and the belated approval from the Defense Department, Boeing has continued to produce production KC-46 aircraft at its factory in Everett, Wash., which will be fitted with refueling equipment and other military hardware once as certification testing is completed before first deliveries in August 2017.

Write to Jon Ostrower at jon.ostrower@wsj.com

(END) Dow Jones Newswires

August 12, 2016 20:35 ET (00:35 GMT)

Boeing (NYSE:BA)
Historical Stock Chart
From Mar 2024 to Apr 2024

Boeing (NYSE:BA)
Historical Stock Chart
From Apr 2023 to Apr 2024