Airbus tanker bid is no problem, says Boeing executive

Thursday, September 15, 2005

Airbus tanker bid is no problem, says Boeing executive
Bell insists 767 version will overcome the competition

By JAMES GUNSALUS
BLOOMBERG NEWS

The Boeing Co.'s chief financial officer dismissed on Wednesday a challenge by Northrop Grumman Corp. and the parent of Airbus to build aerial refueling tankers for the Air Force.

"We are not concerned about competition," James Bell told investors Wednesday at a Morgan Stanley conference in Phoenix. "In fact, we are the competition. We're not worried about EADS and Northrop."

Los Angeles-based Northrop and European Aeronautic, Defense & Space Co., the parent of Toulouse, France-based Airbus, said last week that they are teaming up to break Boeing's monopoly on U.S. military tankers.

But Bell said Boeing's diverse line of commercial jets will help it meet any requirement the Air Force might have in terms of capacity, range and size or of dual use. Boeing is the largest aircraft maker in the world and the second-biggest U.S. defense company after Lockheed Corp.

In 2003, Boeing was hit by a procurement scandal and stripped of a $23 billion contract to supply about 100 tankers. Boeing and EADS are the only two makers of passenger aircraft with fuselages large enough to be converted into tankers that can refuel bombers, fighters and other planes in midair.

Since the Boeing scandal, the Air Force has been studying alternatives for aerial refueling.

The new tanker would replace the KC-135, a design that's more than 30 years old and is based on Boeing's 707, a model discontinued in 1991. The 767 is the base model of Boeing's current tanker, which has been sold to the Italian and Japanese militaries.

"We have the most capable, most advanced tanker built today," Bell said. "We still believe our 767 tanker would be the best solution."

Bell said in March that Boeing's 787, 777 or 747 also could be retrofitted as tankers.

EADS selected Mobile, Ala., in June as the site where it would build refueling tankers if it won the competition. The plant would employ as many as 1,000 people and involve investment of as much as $600 million, EADS North America Chief Executive Ralph Crosby said at a news conference at the time.

"Seeing the ongoing competition around the globe, we have managed to succeed in various competitions with a superior product," Stefan Zoller, head of EADS' defense business, said in an interview yesterday in London. "Why shouldn't it be the same in the U.S.?"

The Air Force said earlier this year that it set aside $552 million between fiscal 2007 and 2011 for research and $8.58 billion to start buying the tankers. The start date for the bidding hasn't been set because review of an analysis of alternatives done by the Rand Corp. won't be completed until later this year, the Air Force has said.

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