NEW YORK (Reuters) - Boeing Co said on Wednesday it is pressing ahead with building aerial refueling tankers while conducting flight tests, raising concerns about costs that may arise as Boeing races to deliver the planes on a tight deadline.The world's biggest aircraft maker recently found problems with the fuel system of the KC-46 Pegasus tanker. Final go-ahead from the U.S. Air Force may not happen until April, leaving just 16 months before it must deliver the first 18 tankers, by August 2017."There's no margin for error going forward," said Ken Herbert, analyst at Canaccord Genuity Inc. Boeing said last week it would take a $536 million after-tax charge to redesign and retrofit the first few aircraft it builds. Boeing typically builds planes during flight tests, but retrofits can be costly.Boeing Chief Executive Dennis Muilenburg downplayed the risk on a conference call, saying the parts of the KC-46 tanker that it was making were "well understood.""There's no technology or invention that needs to be accomplished," he said on a call with analysts and media. Building the planes now, he added, "allows us to ... have high confidence in the production program." The tanker is complex commercial-military hybrid, based on Boeing's twin-aisle 767 passenger plane. On Tuesday Boeing won 50 firm orders and 50 commitments for 767s from freight carrier FedEx Corp valued at up to $20 billion at list prices.Howard Rubel, analyst at Jefferies and Co, noted Boeing is 90 percent finished with testing non-fuel tanker elements, a stage at which problems are rare. Still, he said, "they're not naive about the challenge." Muilenburg said Boeing will fly the first fully outfitted tanker later this summer.Despite the tanker charge, Boeing reported earnings on Wednesday that beat analysts' estimates. Its stock rose 0.6 percent. Boeing cut its full-year core earnings forecast by 50 cents a share to between $7.70 and $7.90, but affirmed its forecast of more than $9 billion in operating cash flow.Boeing said smooth factory operations had produced higher margins, particularly in defense, partly offseting the tanker charges.The 787 program logged $790 million in additional losses, but Boeing said the jet will generate cash this year, and start to trim $27.7 billion in deferred costs when it becomes profitable as production rises to 12 jets a month in 2016. (Reporting by Alwyn Scott; Editing by Richard Chang)
