Boeing CEO says Airbus could win tanker on price

Published 1:33 pm Thursday, June 3, 2010

The Boeing Co.’s CEO thinks his company could lose a lucrative Air Force contract to its rival based on price.

“Airbus could win this thing on price,” Jim McNerney, Boeing’s chief executive, said at an investors conference today.

Despite recent rumors that Boeing may not bid for the $35 billion deal supplying the Air Force with aerial refueling tankers, McNerney said it is likely Boeing will still submit a bid in July. However, the Air Force’s fixed price contract poses “significant risk.” McNerney said he isn’t interested in trying to low bid EADS or offering a price that would cause Boeing not to make a profit.

“This could be a dangerous situation for Boeing,” he said.

Boeing’s rival EADS, parent company of Airbus, announced earlier this year that it will bid for the U.S. Air Force tanker contract even after its partner, Northrop Grumman, dropped out.

Boeing backers in Congress have been working to get the Air Force to consider illegal subsidies that Airbus received, according to a World Trade Organization ruling. Airbus has a counter complaint against Boeing pending with the WTO. The Air Force has said it won’t take the WTO ruling into consideration.

The Air Force plans to award its tanker contract later this year.