03/06 14:00 Boeing C-17s Increasingly Grounded for Repairs, Pentagon Says By Tony Capaccio

Washington, March 6 (Bloomberg) -- The U.S. military is having increasing problems with its top transport aircraft, Boeing Co.'s C-17, including unreliable landing gear, inaccurate navigation software, and shortages of spare parts, according to a new Pentagon report.

The number of C-17's grounded for repairs and modifications is ``now consistently below the command standard'' and ``has become a significant concern,'' said the Pentagon's Office of Operational Test and Evaluation.

The assessment comes as Boeing and the Air Force try to market civilian model C-17s to commercial freight companies. Boeing wants the new business to insure steady production; the Air Force hopes it would allow Boeing to set lower prices on its military C-17. This report may hurt that effort, said an analyst.

``The consistent message from the Air Force and Boeing has been one of a tremendous C-17 `success story,' so to read this stuff at this stage of the program raises doubts about the extent the aircraft has improved and matured,'' said Richard Aboulafia, a defense analyst with the Teal Group, a Washington D.C.-based market forecasting group.

The report warned that Air Force ``policies and procedures flowing from the push toward commercial acquisition are leading the C-17 down a risky path.''

``There are a lot of engineering changes and the C-17 is still a relatively new aircraft so there is still time to fix a lot of problems but unless Boeing and the Air Force take actions, they are going to find the market will react negatively and the biggest market of all is the U.S. Congress,'' Aboulafia said.

Boeing Faces 2004 Deadline

The C-17 entered full production in November 1995 after a development phase under then-McDonnell Douglas Corp. that was so rocky the Pentagon considered canceling the program. The Air Force has taken delivery of 70 of 120 aircraft it has on contract and is considering budgeting for more starting in fiscal 2003.

The C-17 production line is slated to close in 2004 if Boeing gets no more orders.

Most C-17s are based at Charleston, S.C. with the 437th Airlift Wing. The Royal Air Force has leased four.

Officials for the Air Force Air Mobility Command, which is responsible for the C-17 fleet, said they were reviewing the report and had no immediate comment.

A Boeing spokeswoman said the test report outlined a compilation of issues, some of them years old.

``The issues are in various stages of either having been fixed, being fixed, awaiting funding or spare parts or final engineering analysis,'' said Boeing spokeswoman Debra Bosick. ``We will continue to work with our customer to improve the aircraft, both on the production line, in future lots and to retrofit those already fielded,'' she said.

Below Standard

The C-17 fleet is below two standard measures of readiness, said the report. The first is the so-called Mission Capable Rate, or percentage of time the aircraft is available to perform at least one of its assigned missions. The Air Force standard is 87.5 percent. The C-17's rate for last year was between 78.6 percent and 85 percent.

``The MC rate hovered near 90 percent in 1997 before spare parts shortages and increasing depot maintenance caused it to drop,'' the report said.

The second readiness benchmark, called Fully Mission Capable, measures the percentage of time the aircraft is available to perform all its assigned missions. This trend is worse, said the report.

Already below Air Force goals set in 1993 and revised in 1998, the C-17's Fully Mission Capable rates were ``initially trending upward, however due to recent failures of some key components, the trend has reversed,'' said the report.

The standard is 77.5 percent and the aircraft fleet between September 1999 and October 2000 hovered between 37.6 percent and 64.3 percent fully mission capable, the report said.

Problems Cited

Aircraft were down for various reasons: among other things, cockpit window displays pilot use to fly the aircraft were misaligned, a system designed to suppress wing fires kept failing, landing gear was broken and there were glitches in the navigation software.

The C-17 is produced by Boeing's Military Aircraft division at Long Beach, California, which had $12.2 billion of the company's overall $51 billion in 2000 revenue, second only to the commercial aircraft sector, which had $31.2 billion in revenue. Northrop Grumman Corp. builds the fuselage parts. United Technologies Corp. Pratt & Whitney unit builds the engines.

Boeing shares fell 36 cents to $61.55 in midafternoon trading.

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-- Carl Jenkins (somewherepress@aol.com), March 06, 2001