Boeing Says It’ll Talk Air Force One Cost Control

There may be something to this tweeting and jawboning tactic after all. After President-elect Donald Trump called out Boeing (NYSE: BA) for the high price it was charging to replace the aging Air Force One, and threatened to cancel the order for the two planes, the company has pledged to talk with the new administration about how to cut the costs. But to do so, it noted, would require the government to reduce its demands for the planes’ capabilities.

Several days ago Trump tweeted, “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”

While initially criticized over the price tag quoted, which was subsequently proven correct for the full program, and then for engaging in such highly unorthodox communication tactics, it appears the president-elect is getting some form of result. Whether those discussions actually lead to any reduction in the cost of the planes is another matter, because they are such highly advanced, technologically dependent military aircraft, capable of serving as a flying White House. But it’s also clear the aerospace and defense industries may not have an easy ride under the Trump administration.

Trump had campaigned on rebuilding the country’s military capabilities and improving the equipment, weapons, jets, and ships the troops had to work with. After he won the election, shares of defense contractors soared. Lockheed Martin stock rose 6% the day after the election, General Dynamics rose 5%, and Raytheon was up 7%. Boeing itself had hardly reacted to the news, but in the weeks after the election all four stocks had moved sharply higher generating double-digit gains in the process.

All the stocks, however, pulled back after Trump’s tweet on the belief he may take just as hard a line on their deals as he’s indicated he would elsewhere in the government.

Bloomberg reports Boeing officials reached out to Trump’s transition team after the tweet to see if there were ways to lower the costs of the aircraft, and told the news site, “We look forward to working with the U.S. Air Force on subsequent phases of the program allowing us to deliver the best plane for the president at the best value for the American taxpayer.”

Since the election, Trump has negotiated for the Carrier unit of United Technologies to get a $7 million state tax break to keep 730 jobs in the U.S. instead of moving them to Mexico; and may have had an impact on Japanese telecom giant Softbank’s decision to invest $50 billion in the U.S.

While noteworthy, it’s a bit unprecedented for a president — let alone a president-elect — to engage in such negotiations with individual companies over particular contracts and siting decisions.

Rich Duprey has no position in any stocks mentioned.