Northrop, EADS beat Boeing to build US tanker
Mid-flight refuelling: A handout illustration provided by EADS/Northrop Grumman showing a tanker aircraft KC-30 (R) during the refuelling of a US B2 bomber in the air. Picture: EPA
Sunday, March 2, 2008
NORTHROP Grumman and Airbus parent EADS won a US$35 billion ($48.8 billion) US Air Force refuelling plane deal on Friday in a surprise blow to Boeing, until now the Pentagon's sole supplier of aerial tankers.
Northrop Grumman Corp and EADS, "clearly provided the best value to the government", Sue Payton, the Air Force's top acquisition official, told reporters at a briefing.
The Air Force plans to buy 179 tanker aircraft over the next 15 years to begin replacing its KC-135 tankers, on average 47 years old, that were built by Boeing Co.
The decision, which could still be challenged by Boeing or its backers in Congress, caps for now a saga that included a cancelled Boeing order and the Pentagon's biggest procurement scandal in decades with jail terms for an ex-Air Force weapons buyer and Boeing's former chief financial officer.
Shares of Northrop, the Pentagon's No 3 supplier after Lockheed Martin Corp and Boeing, rose as much as 6.5 per cent in extended trading on Friday. Shares of Boeing, which was widely expected to win the job, fell as much as five per cent before paring their losses to be down three per cent.
"A major reversal of fortunes, and a truly surprising outcome," said Richard Aboulafia, of the TEAL Group aerospace consultancy, about Boeing's loss.
Boeing said it was disappointed with the outcome and would weigh its options after a detailed Air Force briefing on the reasons for the decision.
"We believe that we offered the Air Force the best value and lowest risk tanker for its mission," Boeing said.
The initial contract for the newly named KC-45 tanker, a modified Airbus A330 airliner, covers four test aircraft for US$1.5 billion. With plans to buy 175 more planes, it would be worth US$35 billion overall, the Air Force said in a statement.
Gen Arthur J. Lichte, commander of the Air Force's Air Mobility Command, said the Northrop plane offered many advantages over Boeing's proposed 767-based tanker.
"More passengers, more cargo, more fuel to offload, more patients that we can carry, more availability, more flexibility and more dependability," he said, listing Northrop's edge.
The programme marks the first stage of a multi-decade plan to replace more than 500 KC-135 tankers used to extend the range of fighter jets and other warplanes. The US hopes to start operating the new tankers in 2013.
Including follow-on orders and in-service maintenance, it could be the second costliest military aircraft purchase in coming decades, topped only by Lockheed Martin's F-35 Joint Strike Fighter.
Future phases of the tanker renewal plan could bring the costs to more than US$100 billion, although the winner of this competition is not assured of capturing the next contracts.Reuters
Northrop Grumman Corp and EADS, "clearly provided the best value to the government", Sue Payton, the Air Force's top acquisition official, told reporters at a briefing.
The Air Force plans to buy 179 tanker aircraft over the next 15 years to begin replacing its KC-135 tankers, on average 47 years old, that were built by Boeing Co.
The decision, which could still be challenged by Boeing or its backers in Congress, caps for now a saga that included a cancelled Boeing order and the Pentagon's biggest procurement scandal in decades with jail terms for an ex-Air Force weapons buyer and Boeing's former chief financial officer.
Shares of Northrop, the Pentagon's No 3 supplier after Lockheed Martin Corp and Boeing, rose as much as 6.5 per cent in extended trading on Friday. Shares of Boeing, which was widely expected to win the job, fell as much as five per cent before paring their losses to be down three per cent.
"A major reversal of fortunes, and a truly surprising outcome," said Richard Aboulafia, of the TEAL Group aerospace consultancy, about Boeing's loss.
Boeing said it was disappointed with the outcome and would weigh its options after a detailed Air Force briefing on the reasons for the decision.
"We believe that we offered the Air Force the best value and lowest risk tanker for its mission," Boeing said.
The initial contract for the newly named KC-45 tanker, a modified Airbus A330 airliner, covers four test aircraft for US$1.5 billion. With plans to buy 175 more planes, it would be worth US$35 billion overall, the Air Force said in a statement.
Gen Arthur J. Lichte, commander of the Air Force's Air Mobility Command, said the Northrop plane offered many advantages over Boeing's proposed 767-based tanker.
"More passengers, more cargo, more fuel to offload, more patients that we can carry, more availability, more flexibility and more dependability," he said, listing Northrop's edge.
The programme marks the first stage of a multi-decade plan to replace more than 500 KC-135 tankers used to extend the range of fighter jets and other warplanes. The US hopes to start operating the new tankers in 2013.
Including follow-on orders and in-service maintenance, it could be the second costliest military aircraft purchase in coming decades, topped only by Lockheed Martin's F-35 Joint Strike Fighter.
Future phases of the tanker renewal plan could bring the costs to more than US$100 billion, although the winner of this competition is not assured of capturing the next contracts.Reuters
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