McDonnell Finishes Assembling 1st C-17 : Aerospace: The completion clears the way for the Air Force to award a new production contract for the cargo jet.

McDonnell Douglas completed assembly of its first C-17 cargo jet just before its annual holiday shutdown, a key milestone in the $30-billion program that clears the way for the Air Force to award a new production contract for four additional aircraft.

The firm’s Douglas Aircraft unit finished building the first C-17 at its massive hangar on the west side of the Long Beach Airport late on Dec. 21, meeting the Air Force’s schedule for the event but missing by one month its accelerated internal schedule.

The first of the planes is scheduled to fly in June; the Air Force would receive its first delivery a year later.

McDonnell has met most of the C-17’s scheduled milestones during 1990, even though some officials are worried that those guideposts are not reflecting the true progress of the program.

A recent Air Force study estimated that Douglas would overrun its current C-17 contracts and sustain a loss of about $600 million. The firm disputes the Air Force estimate, saying it will not sustain a loss on its current contracts.

The completion of the first C-17, which is designed to transport large military payloads to the front lines of battle, is some much-needed good news for McDonnell. Under an agreement with the Air Force, McDonnell could not receive funding under its fiscal 1990 contract until it completed assembly of the first C-17.

The Air Force and the firm signed an agreement last June defining exactly what was meant by completion of assembly. The agreement required that all of the aircraft structure, flight control surfaces, electrical system, hydraulic lines and engines had to be installed.

An Air Force news release announcing the C-17 completion, however, made no mention of the critical software that is needed for the aircraft’s flight control and mission computers. A number of experts are worried about whether software development could cause future delays.

Separately, Douglas said it had delivered 139 MD-80 jetliners in 1990, a record number for the aircraft model.

But Douglas has shelved plans to boost 1991 production of MD-80s to 150 aircraft as airlines have delayed exercising options because of rising fuel prices and concerns over the weak economy.

Douglas also announced that it has named David O. Swain as vice president and general manager for the C-17. Deputy President John Capellupo had served as interim manager since May. Swain, a 26-year McDonnell employee, has been the vice president responsible for program and business activities in the C-17 program.