American defense contractor Northrop Grumman and Airbus parent company EADS announced Wednesday that they have teamed up to develop an aerial refueling tanker to challenge the Boeing Co.’s KC-767.
The move was widely expected, Teal Group analyst Richard Aboulafia said. EADS has been seeking an American partner for its proposed KC-30 program for more than a year, and earlier this year announced it would build a plant in Mobile, Ala., where it would convert A330 jetliners into military tankers should it receive a U.S. contract for them.
However, Northrop will be the prime contractor on the program, the companies said.
“This is going to be an American airplane built for the U.S. Air Force,” said Randy Belote, a Northrop spokesman.
Boeing and McDonnell Douglas, which it now owns, have provided the U.S. Air Force with all the tankers in its fleet. Boeing seemed to have locked up a $23 billion contract last year to start replacing the oldest of those tankers, aging KC-135s, with Everett-built 767s.
However, that deal was derailed by a Pentagon procurement scandal that sent two Boeing executives to prison and led to the resignation of former chief executive Phil Condit.
Some in Congress now are calling for a new round of competitive bidding before a new tanker contract is awarded, which led to the EADS-Northrop bid.
“We’ve heard both Congress and the Air Force stress the need for a competition, and we are prepared to address that need by forming a strong industry team,” said Scott Seymour, president of Northrop’s Integrated Systems division.
Boeing spokesman Paul Lewis said the company has “more than 75 years of experience in aerial refueling technology” and is ready for “a competition on a level playing field, once the Air Force defines its requirements.”
EADS has already sold A330-based tankers to Australia and the United Kingdom. Boeing has sold its KC-767s to Japan and Italy.
Many things still must happen before EADS and Northrop can build a tanker for the American Air Force, Aboulafia said.
For starters, legislation now before Congress would block Airbus from selling jets to the U.S. military as long as the United States and the European Union are embroiled in a World Trade Organization dispute over aerospace subsidies, he said.
There’s also the question of how much longer Boeing can keep its 767 line in Everett going. The Air Force has long favored 767 tankers, but the delays in ordering the tankers, combined with a dwindling order backlog for commercial 767s, prompted Boeing to begin studying whether to stop building the planes.
Boeing has won orders for 18 767s this year and now has a big enough order backlog to allow it to build one jet a month in Everett through the end of 2007.
The Pentagon probably won’t have made up its mind by then, Aboulafia said. “By best expectations – 2008,” he said. “It’s still a few years away.”
The bottom line is that the Air Force needs to make up its mind about what kind of tanker it wants. Aboulafia said there has been some talk in Pentagon circles about the need for a larger class of tankers based on the Boeing 777 or the Airbus A340.
If the Air Force opts for a larger tanker, that would be to Boeing’s advantage, he said. The Airbus A330 is closely comparable to Boeing’s 767, but in the larger class, “777 beats A340 every time.”
The Associated Press contributed to this report.
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