The Long Beach City Council has granted Boeing a five-year lease extension for the company’s C-17-maintenance-and-repair facility, located on a six-acre site at 3521 E. Spring St. at the Long Beach Airport.
Though the lease is extended through at least 2018, the aircraft manufacturer still has the right to discontinue its contract with the City at any time in light of the C-17 program’s shaky future, according to city staff.
The original lease agreement, into which the City and Boeing’s predecessor McDonnell Douglas Corporation entered in 1991, provided for an initial 22-year lease term, along with four options to extend the lease for an additional five years, according to a city staff report for the May 21 Council meeting.
Boeing has opted to exercise its first five-year option, but the aircraft manufacturer would also like to have the flexibility to terminate the lease, “as may be necessary given the uncertainty of the C-17 program,” city staff stated.
Under the provisions of the lease, Boeing was required to request the extension in writing at least 90 days prior to the expiration of the initial term, which is June 21. Boeing has the right to terminate the updated lease at any time but must provide at least a nine-month notice, according to city staff.
The facility is used for Boeing’s C-17 Globemaster III Integrated Sustainment Program (GISP), which provides repairs, maintenance and other support services for existing C-17 fleets of the United States Air Force (USAF) and foreign countries.
The facility, known as Building 98, located at the intersection of Spring Street and Redondo Avenue, adjacent to the airport’s air-traffic-control tower, is where C-17s are serviced for routine support work and maintenance operations.
Many of the heavy-lift, transport aircraft, which are already delivered to USAF and international customers, are required to be flown back for long-term maintenance after a certain amount of flight hours. C-17 aircraft are flown in for repairs during instances of severe damage as well.
Lori Moore, spokesperson for Boeing’s C-17 GISP, stated via email that Boeing is responsible for post-delivery support to the global fleet of C-17 Globemaster aircraft. Under an agreement, Boeing acts as the USAF’s product-support manager for all C-17-sustainment activities, including material management and depot-maintenance support, she said.
“Currently three C-17s are in different stages of repair at the building,” Moore said. “Two of the three C-17s will be completed and depart Long Beach by the end of June. The third aircraft is undergoing major structural repairs, which are to be completed by August 2014. Boeing will continue to partner with the USAF on future depot maintenance and modifications needs if required,” she said.
The USAF has approved a 10-year contract request for Boeing to provide continued support to its C-17 fleet through Fiscal Year 2021. The current GISP agreement is a five-year contract through Fiscal Year 2017, while the rest of the years remain as four one-year options.
In addition to Boeing’s C-17 GISP on approximately six acres in Long Beach, the rest of the C-17 GISP now operates out of Huntington Beach, said Cindy Anderson, spokesperson for Boeing’s C-17 program.
The entire C-17 Globemaster III production plant, which employs a few thousand people, resides on a total of 163 acres in Long Beach.
Although it has spent hundreds of millions of dollars on maintenance contracts in recent years, the USAF, the aircraft manufacturer’s largest customer, has stopped any new orders, which has severely hindered Boeing’s ability to keep the program afloat.
About a year ago, Boeing announced the authorization of a post-production contract worth up to $500 million, which industry officials said signifies the program has begun major steps toward winding down production. Prior to that, the company had reduced its C-17-production rate from 15 to 10 aircraft per year, which required reducing its Long Beach workforce by 900 employees.
Anderson said, with existing and confirmed orders, Boeing’s C-17 production is scheduled to last at least through the third quarter of 2014, though new and existing customers could extend production past that timeframe. This year, Boeing is launching the first of 10 C-17s bound for India.