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C-17 PROGRAM UNDER REVIEW

 ST. LOUIS, Oct. 28 /PRNewswire/ -- Since May 1993, a Defense Acquisition Board (DAB) initiated by the Under Secretary of Defense for Acquisition has been reviewing the C-17 program in an effort to resolve outstanding issues and to make recommendations regarding the C-17's future. In connection with this review, McDonnell Douglas has provided data and participated in numerous discussions.
 John F. McDonnell, chairman and chief executive, said today, "I believe an overall settlement would be warranted to bring closure to program specification issues, claims and related matters, and to permit the continued production of C-17 aircraft."
 The company is currently discussing with the government an overall settlement on terms which could require a charge by the company to pre- tax earnings on current contracts and unreimbus?ed expenditures on future contracts of up to $450 million in aggregate, but which would not result in any significant adverse cash impact. These discussions will not have an impact on third-quarter financial results.
 Any such settlement would be subject to government and company approvals. Alternatives if such a settlement is not achieved include program termination, completion of current contracts with no new contract awards, or continuation of the program with fewer than or all 120 aircraft. In these alternative circumstances, open program issues and claims would remain to be resolved in another manner. As a result, the ultimate impact on McDonnell Douglas associated with this DAB review is still uncertain.
 McDonnell said, "We believe that over the next few years, the program and the aircraft will demonstrate excellent performance and satisfy the country's need for a modern airlifter fleet."
 -0- 10/28/93
 /CONTACT: James R. Reed, McDonnell Douglas Corp., 314-232-2300/


CO: McDonnell Douglas Corp. ST: Missouri IN: ARO SU:

MF-JB -- LA036 -- 8116 10/28/93 16:11 EDT
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Publication:PR Newswire
Date:Oct 28, 1993
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