Tanker key to Boeing sales, Northrop says it’s keeping contract

Published 10:48 am Friday, May 30, 2008

With a $35 billion contract under review, rivals the Boeing Co. and Northrop Grumman agree on one thing: the Air Force tanker bid is a big deal.

Boeing’s chief of defense, Jim Albaugh, acknowledged the significance of the tanker competition while speaking today in Singapore, according to Bloomberg.

“Most countries will be influenced by the decision the U.S. Air Force makes,” Albaugh said. “To a large degree, our ability to sell tankers internationally will depend on what happens in the U.S.”

The Air Force selected Northrop Grumman and EADS’ tanker on Feb. 29. Boeing has protested the decision to the Government Accountability Office, which is expected to give its ruling by June 19.

Boeing won contracts to supply tankers to Italy and Japan but fell far behind in delivering those tankers. EADS has won several recent international competitions, including January’s one in Saudi Arabia.

But Boeing is realistic about its chances of overturning the U.S. Air Force’s decision. Boeing’s chief executive, Jim McNerney, noted yesterday in this Reuters report that the GAO doesn’t often agree with the protesting company. Still McNerney said he hopes the GAO will side with Boeing.

EADS partner Northrop Grumman doesn’t think Boeing’s bid to reverse the U.S. Air Force’s decision will work. Northrop’s chief executive, Ron Sugar, called his company’s long term prospects “outstanding” and said he thinks that Northrop will keep the contract in the end. For more of Sugar’s comments, read the Reuters report.

In fact, Northrop feels so good about its chances that it announced earlier this month that it would hold a groundbreaking ceremony for its new factory in Mobile, Ala., on June 28, pending the outcome of the GAO decision.