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Mon, Dec 06, 2004

EADS To Boeing: Want To Split The Tanker Deal?

Could It Be A Win-Win?

They're bitter rivals when it comes to commercial aviation. They're at philosophical odds about the future of passenger flight. Their animosity towards one another has led them to the World Trade Organization, bearing charges and counter charges of illegal government subsidies.

But Airbus is now asking Boeing, in essence, "Want to partner up on the KC-135 tanker replacement deal?"

"What we're saying is that we believe it could be split, and that this is acceptable to us as well," said Diane Murphy, who speaks for EADS's North American operations. She was quoted by the Chicago Tribune, based in Boeing's adopted hometown.

Boeing blew the $23.5 billion contract when the Air Force learned that one of its own, negotiator Darleen Druyun, had thrown the contract to Boeing in exchange for a high level job at the airplane maker. Druyun is serving time in a federal prison. The scandal also claimed Boeing CFO Mike Sears, who might also face criminal charges, and has been repeatedly cited as a reason Phil Condit stepped down as CEO of the company and handed the reigns over to Harry Stonecipher.

Last month, the Air Force said it will start over with the process of awarding a contract to replace the aging fleet of KC-135s.

The odd offer from EADS is also notable given that the company has been looking for an American partner in the bidding war against Boeing. But both Lockheed Martin and Northrop Grumman have said "no thanks."

As for Boeing, the US aerospace giant seems rather cool to the idea of teaming up with its arch rival.

"The Department of Defense and the Air Force are in the process of reviewing their options," said Boeing spokesman Doug Kennett, quoted in the Tribune. "It will be the government that will make the decision on how to proceed on the tanker program."

What's the industry think of a tanker fleet made up of Boeing 767s and Airbus A330s? The reaction is mixed.

"It could conceivably be done, but it doesn't make a lot of sense," Paul Nisbet, an aerospace analyst with JSA Research, told the Chicago paper. Just think of the logistics. The USAF would have to train mechanics to service both aircraft and would have to stock parts for each. That, to many in aviation, is a nightmare in the making.

But EADS's Murphy says that's not so. "If you have one supplier and something goes wrong with the aircraft, then you have to ground the entire fleet."

FMI: www.boeing.com, www.eads.com

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