Working With Northrop Grumman To Outbid Boeing

Airbus and its European parent company, EADS, appear to be making much more than a token effort to beat out arch rival Boeing for the USAF tanker contract.

The contract, worth up to $100 billion, was Boeing's to lose and, because of an ethics scandal involving an Air Force negotiator who went to work for Boeing, the deal was indeed lost. Now it's up for bid again and Airbus, along with another Boeing nemesis -- Lockheed Martin -- are both sizing up the playing field.

But while Lockheed Martin is merely examining the situation now, Airbus is already all in. "We are doing all that is necessary to be a real player in this competition," said Ralph Crosby, a former Northrop Grumman Corp. executive who now leads EADS' North American operations. "We do not intend to be a stalking horse."

Even though EADS/Airbus doesn't have the ethical baggage that Boeing has going into this new round of bidding, it's not likely that the European conglomerate will win the entire tanker contract. As ANN has reported, the US and the EU are locked in a trade skirmish over subsidies given to both Airbus and Boeing. Each side says the other is illegally propping up its aerospace giants. The fight got ugly when the US lodged a formal complaint with the World Trade Organization and unilaterally pulled out of a 1992 transatlantic aviation agreement that covered Airbus subsidies.

Still, many analysts think the USAF might award part of the contract to the Europeans and that's what EADS appears to be aiming for. Its executives say a split of the massive contract to replace the aging KC-135 fleet makes sense for both Boeing and Airbus. And analysts say the Pentagon could come out the winner.

There is growing awareness that more competition provides a better playing ground," said Richard Aboulafia, an analyst with aerospace research firm Teal Group Inc. He was quoted by the Los Angeles Times. "The more players, the more you can pressure the other guy for a better deal."

The EADS tanker would be based on the A330 platform, while the Boeing version would be a 767 variant. The winning airframe will also have to serve as a freight hauler, battlefield command and control platform and perhaps as an AWACS aircraft.

The competition might come down to which company can produce a more effective fueling boom. The Times reports EADS is spending $90 million to come up with a boom for the tankers its building for Australia. Boeing's boom can only refuel one aircraft at a time. Still, Boeing says its boom technology is far ahead of Airbus's.

"We continue to believe that the 767 tanker is the right-sized aircraft to perform the difficult missions asked for by the Air Force," said Boeing spokesman Douglas Kennett, also quoted in the Times. "That means the ability to take off and land with a full load of fuel from unimproved and narrow runs. 767 tankers can operate from 50% more airfields than can the Airbus offering."

FMI: www.airbus.com