C-130 Project Overruns Cost Boeing Profit

Boeing Co. lost nearly half its eligible profit last year on a $3.8-billion program to upgrade electronics on cargo transports because its costs overran by 42% in the early development phase, the Air Force said.

The $183-million overrun was on a $435-million initial development contract for the C-130 avionics modernization program Boeing won from incumbent Lockheed Martin Corp. in 2001. It cost Boeing about $4 million of an available $8 million in profit.

The lower profit reflects a new Air Force policy to tighten the criteria for award fees, said Marvin Sambur, the service’s undersecretary for acquisition. Boeing can recoup the loss this year if its performance improves, he said.

Boeing shares fell 50 cents to $41.94 on the New York Stock Exchange.