T-7 testing delay could trigger schedule slip and spell new trouble for Boeing

By Michael Marrow / November 22, 2022

(Editor's note: Following publication of this article, Boeing said in a statement that an "updated schedule" was first indicated in the company’s most recent quarterly earnings summary.)

Boeing's T-7 Red Hawk is facing a possible schedule slip after qualification testing for the aircraft’s emergency escape system was pushed to fiscal year 2024, according to the Air Force and the company.

Along with fiscal challenges for Boeing that could be reflected in new charges, the potential delay, first indicated in Boeing’s third quarter financial earnings summary and details of which were disclosed to Inside Defense by an Air Force spokeswoman, risks postponing recapitalization for the aging T-38 training jet.

Officials previously planned for the Red Hawk to reach a milestone C review, which would pave the way to the program’s production phase, in November 2023. However, the emergency escape system must be qualified prior to milestone C -- a process that will consist of at least eight separate tests -- and according to a statement from Air Force spokeswoman Maj. Alexandra Stormer, the testing will take over half a year to finish once it begins.

The program is set to resume qualification testing for the emergency escape system in “early FY-24,” Stormer said, a process that will “continue for seven months” and must be complete before milestone C can be reached.

The fiscal year begins on Oct. 1, 2023, just one month before the program’s current milestone C date, meaning the earliest the program could complete qualification testing under the Air Force’s estimate is April 2024.

Though Stormer would not comment on whether the program’s milestone C has been formally delayed, she acknowledged “since milestone C is event-based, any delays to system verification would be reflected in the milestone C estimate,” and “the T-7 Program Office and Boeing are constantly assessing milestone C and will update the estimate accordingly.”

Boeing said in a statement to Inside Defense that “to improve and make enhancements to the escape system, we are leveraging both study ejection seat shots and qualification shots.” The next study shot, according to Boeing, is planned for the first quarter of calendar year 2023 and the next qualification testing will take place in the first quarter of fiscal year 2024.

“The tests are success driven and should be complete” by the second quarter of calendar year 2024, the statement adds, a timeline that would align with the Air Force’s estimates.

Following publication of this article, Boeing added in a statement that “this updated schedule was included in our third quarter closing position,” a reference to the company’s most recent 10-Q financial disclosure form that reads “EMD aircraft flight testing is now estimated to start in 2023” and that “the first production and support contract option is expected to be exercised in 2024.”

Boeing also said that “as with any development program, we test to learn and then adjust as needed. Recently, the T-7A program experienced challenges in ground, pre-flight testing and hardware qualification, but we continue to work closely with our supply base to identify areas along the digital build of the aircraft to improve quality and delivery times.”

Bad news for Boeing defense

A delay for the T-7 would deal yet another blow to Boeing’s defense business, which has failed to meet key objectives and has hemorrhaged billions of dollars in losses, placing the company in tightening financial straits and prompting executives to overhaul Boeing’s defense divisions.

The Government Accountability Office had previously warned another delay could be coming, stating in a June annual weapon systems assessment that qualifying the emergency escape system remained a top risk to a milestone C decision, which congressional auditors said has already been postponed a year.

GAO also largely attributed major schedule impediments to shortcomings on Boeing’s end, writing that “milestone delays were primarily due to Boeing’s continued underestimation of the scope of the work and resources needed to accomplish it.”

Boeing has braced investors for more losses on the program that has already recorded over $1.1 billion in charges, writing in the company’s most recent earnings report that “risk remains that we may record additional losses in future periods” for the T-7.

Still, a potential schedule slip will likely call into question Boeing’s standing as a top-tier defense supplier, according to a prominent analyst, and add to a string of recent setbacks for the company, such as a 19-month delay for the KC-46 tanker.

Richard Aboulafia, a managing director at AeroDynamic Advisory and longtime aviation industry analyst, said in an interview with Inside Defense that problems with the T-7 and others across the company’s defense business stem from a time where Boeing could lean more heavily on commercial cash flow to keep profits up.

That advantage has been nearly erased by the pandemic, a crisis with the 737 MAX and stiff competition from Airbus, he said. An announcement at a recent investor conference that Boeing will not build a new commercial aircraft until the 2030s may further compound the company’s woes, he added.

“Like all the other Boeing fixed-price contracts, the [T-7] bid was submitted at a time when they had incredibly strong commercial revenue and they could just buy their way to a greater defense market position,” Aboulafia said.

“T-7 was sort of the very apex of that thinking,” he said, referencing the Air Force’s projected $16.3 billion development cost for the new trainer and Boeing’s eventual $9.2 billion bid that won the contract. Aboulafia also pointed to the decision to split development between Saab and Boeing, which he said “just adds risk.”

Aboulafia said Boeing may log additional internal costs for the aircraft’s development that have been reflected in previous charges disclosed by the company, warning that the program may be heading down a similar path as the KC-46. However, the Air Force could use leverage outside the T-7 program to pressure Boeing to perform, he said.

One option the Air Force could pursue, Aboulafia said, is trying to stick Boeing with sustainment costs for the T-38 fleet, which may run higher if the service must postpone its recapitalization due to T-7 delays.

“The best leverage is that. Just go after them for additional legacy fleet sustainment costs and whatever other penalty payments,” he said. The Air Force may also “factor performance into future bid evaluations,” saying as well that Boeing may end up “paying more in the long run to undo the damage associated with those overly optimistic expectations” associated with bids like the T-7.

Boeing has seen faith in its ability to deliver waver among Pentagon leadership, The Air Current reported in May. The company’s struggles with numerous defense programs and sprawling challenges for relatively less complicated efforts like tankers and training jets does not bode well for the Boeing’s ability to compete for a more advanced platform like the Next Generation Air Dominance system, Aboulafia said.

There’s a “possibility,” he said, that Boeing could still play a role in the program or other next-generation acquisitions. “But where things are now, it’s either Lockheed Martin or Northrop Grumman, and not Boeing.”

Technical challenges, recap risk

Even with a schedule that has been acknowledged as aggressive by T-7 program officials, Boeing has failed to meet its own projected milestones.

During a briefing with reporters in December 2021 at the Red Hawk production line in St. Louis, MO, Boeing T-7 program manager Paul Niewald said the company anticipated the aircraft’s milestone C decision would be reached in July 2023, a timeline later shown to be more optimistic than government estimates.

Other technical challenges with the aircraft remain, which are slated to be resolved at roughly the same time as qualifying the escape system.

For example, the program still needs to qualify the aircraft’s windshield after officials determined it needed to be redesigned to withstand the impact of a four-pound bird strike. That testing, Stormer, the Air Force spokeswoman said, will proceed “in early FY-24, due to material lead times, and is expected to continue for 30 days."

The ground-based training system’s projector technology is also not expected to be fully mature until spring 2024, Air Force spokesman Maj. Joshua Benedetti said in a statement. The program has already needed to replace the system twice for falling short of requirements, GAO noted in the June weapon systems assessment.

A T-7 delay may also have cascading effects for the Air Force. The service is counting on Red Hawk deliveries to replace the T-38, an airframe that Mitchell Institute for Aerospace Studies Executive Director Douglas Birkey noted has been in service since the Vietnam War.

Pilots “have been doing their best to wring that airframe out for everything it’s worth,” Birkey said in an interview with Inside Defense, adding that the T-38 is “not designed for the type of training we want to do today.”

Emerging threats from adversaries’ fourth- and fifth-generation fighters demand a more capable trainer, Birkey said, one that was promised by fielding the Red Hawk.

“The entire training enterprise they're trying to create with the T-7, it’s where we need to go,” he said. “We needed to get there yesterday.”