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Boeing wins massive US air tanker contract

by Staff Writers
Washington (AFP) Feb 24, 2011
US aerospace giant Boeing on Thursday won a massive contract to supply aerial refueling tankers to the US Air Force, defeating European rival EADS in a long and tortuous contest.

Announcing the first part of a contract worth more than $30 billion, the Pentagon said: "Boeing was a clear winner."

The US firm is now tasked with delivering 18 aircraft by 2017, but the contract is expected to grow to 179 tankers.

The planes, effectively flying gasoline stations, give the air force global reach and allow the United States to project military power well beyond its borders.

The decision capped a nearly 10-year attempt by the air force to begin to replace an aging Boeing-built fleet of 400 tankers dating back to the 1950s.

But it was an upset, with most experts predicting the European Aeronautic Defence and Space Company would land the contract.

Air Force Secretary Michael Donley said both firms met 372 mandatory requirements, but because Boeing's bid was more than one percent lower, extra requirements were not taken into account.

The lower-priced Boeing proposal will offer taxpayer savings, he added.

But facing the prospect that the decision may be contested, Donley emphasized that the process was careful and thorough.

"This isn't about opinions, it's about the integrity of the source selection process," Donley said.

"We hope that all parties... will respect the decision and allow this important procurement to proceed unimpeded."

"The war fighter deserves nothing less," he added.

Boeing proposed the NewGen Tanker, based on its long-haul, wide-body 767 commercial aircraft. The tanker will be built at a plant in Everett, Washington state and militarized in Wichita, Kansas.

Boeing chief Jim McNerney said the firm was "honored" to "provide a vital capability to the men and women of our armed forces."

"Our team is ready now to apply our 60 years of tanker experience to develop and build an airplane that will serve the nation for decades to come," he added.

Dennis Muilenburg, president and chief executive of Boeing Defense, Space & Security, said in a conference call with reporters that the victory will "create" 50,000 US jobs, noting that Boeing has more than 800 suppliers in more than 40 states.

The win will have a "very significant" economic impact on the United States, he said.

The announcement came after the US financial markets closed. Boeing shares were up more than three percent in after-hours trading.

EADS North America officials expressed disappointment over the announcement.

"This is certainly a disappointing turn of events, and we look forward to discussing with the Air Force how it arrived at this conclusion," EADS North America chairman Ralph Crosby said in a statement, adding that a review of the decision "will take some time."

The surprise decision in the politically charged battle created winners and losers across a post-recession US economy still struggling with high unemployment.

Senator Patty Murray, a Democrat from Washington state, swiftly welcomed the news as a win for Boeing and a win for the state.

"Today's long-awaited decision by the Pentagon is the right one for our military, our taxpayers and our nation's aerospace workers," Murray said in a statement.

"At a time when our economy is hurting and good-paying aerospace jobs are critical to our recovery, this decision is great news for the skilled workers of Everett."

Richard Trumka, head of the AFL-CIO union, said the victory "is a huge boost to America's workers and to President (Barack) Obama's goal of winning the future and creating good jobs here at home."

At the same time EADS's defeat dealt a blow to supporters in the US Gulf Coast states trying to recover from last year's BP oil spill disaster.

If EADS had won, its France-based Airbus unit would have assembled tanker aircraft at a new plant in Mobile, Alabama.

In a letter to Obama earlier Thursday, the Republican governors of Alabama, Louisiana and Mississippi said an EADS victory would "create a much-needed economic ripple effect across a Gulf Coast region still reeling from natural and man-made disasters."

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