Boeing's KC-46 program approved for production: U.S. Air Force

[August 13, 2016]  WASHINGTON (Reuters) - Boeing Co's KC-46A refueling plane has been approved for production, with work underway for the first two low-rate initial production lots to be awarded in the next 30 days, the U.S. Air Force said on Friday.

"The KC-46 program has made significant strides in moving the Air Force toward the modernization needed in our strategic tanker fleet," Air Force Secretary Deborah Lee James said in a statement announcing the approval.

The Air Force added it would soon award Boeing contracts for the first two batches, 19 aircraft in total, with a pre-negotiated combined value of $2.8 billion.

Last month the KC-46 refueled an A-10 Thunderbolt II aircraft in flight, passing the final test needed to begin initial low-rate production.

The Air Force said in June that it was seeking compensation from Boeing for delays in the program. Boeing already has taken $1.3 billion in pretax charges for cost overruns.

Boeing expects to deliver a first batch of 18 tankers in January 2018 instead of August 2017.

"Production approval is an important, positive step for the program, and the Boeing/Air Force team has worked extremely hard to get to this point," Boeing spokeswoman Caroline Hutcheson said.

(Reporting by Idrees Ali; Editing by Chris Reese and Leslie Adler)

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