EADS to Compete in US Air Tanker Deal

22.04.2010 Joint Ventures

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EADS announced on Tuesday it will bid on a lucrative deal to supply the US Air Force with new aerial refueling tankers, taking on its archrival Boeing.
EADS, the parent of Airbus, will make an offer as the lead contractor, having lost its US partner Northrop Grumman 6 weeks ago, officials said.
Chief Executive Officer Louis Gallois said the company wanted to expand in the American defense market, long dominated by Boeing and other US firms.
Other US firms, including General Electric, Honeywell, Hamilton Sunstrand and Goodrich, would serve as sub-contractors for EADS, officials told reporters in Washington.
Ralph Crosby, Chairman of EADS North America, said he believed EADS would prevail in the contest because it had the best aircraft, a version of the Airbus 330, arguing the plane is already flying and in production.
The move revives a long-running contest between EADS and Boeing for the high-stakes deal, which has been plagued by scandal, intense lobbying in Congress and transatlantic tensions.
The decision came after the US Defense Department said it would extend a May 10 deadline for bidding by 60 days if EADS formally entered the contest. EADS had asked for a 90-day extension after Northrop Grumman bowed out, saying the contract requirements favored Boeing's smaller plane.
The Pentagon, which had faced the prospect of Boeing being the sole bidder, welcomed Tuesday's announcement. Boeing reacted by vowing to prevail in the contest, and repeated criticism of the Pentagon for offering to postpone the deadline for proposals.
US Air Force commanders see the planned KC-X aircraft as crucial to reinforcing American air power and are anxious to replace the older Boeing KC-135 Stratotankers that date back to the 1950s.
Industry analysts said EADS faced long odds in trying to beat out Boeing, which could offer a lower price with its smaller plane. But by choosing to compete, EADS could ensure solid relations from the Pentagon in the future even if it lost the tanker contract, analysts said.
One European source close to the negotiations said EADS entered the contest also because it wanted to "prevent Boeing from running up huge margins" as a sole bidder.
The winner of the lucrative contract to supply 179 planes is expected to be declared by early fall, according to the Pentagon.
 



 
 

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