Boeing says global tanker orders hinge on U.S. ruling

The Boeing Co. said Friday that global orders for its 767 tanker plane will depend on the U.S. government's ruling on a $35 billion Air Force order lost to Northrop Grumman Corp. and Airbus' parent.

"Most countries will be influenced by the decision the U.S. Air Force makes," Jim Albaugh, chief of Boeing's military unit, told reporters in Singapore. "To a large degree, our ability to sell tankers internationally will depend on what happens in the U.S."

Chicago-based Boeing is protesting an Air Force refueling-tanker order given Feb. 29 to Northrop Grumman and European Aerospace, Defense and Space Co., saying changes made midstream in the contest unfairly favored the competitors.

Global sales account for 13 percent of total revenue at Boeing's military unit, almost double the figure five years ago, Albaugh said.

Boeing's filing in March with the Government Accountability Office suspends the contract for as long as 100 days while the GAO conducts a review and hears a defense from the Air Force and winning bidders. Boeing will have to show that the choice of Los Angeles-based Northrop and EADS, based in Paris and Munich, Germany, violated Pentagon procedures or U.S. law. A GAO decision is due June 19.

"There is going to be plenty of opportunities to sell 767 tankers in the event that the protest we have is sustained, and there is a recompetition and we're fortunate enough to win that recompetition," Albaugh said.

The plane maker is seeking to expand in overseas markets such as India, Japan, South Korea, Singapore and Australia as military spending in the U.S. wanes. Much of Boeing's estimated growth of as much as 5 percent a year will come from outside the U.S., Albaugh told reporters.

Northrop and EADS won the contract to supply 179 aircraft, to be named the KC-45A, that will replace Boeing-built KC-135 tankers flown by the Air Force since 1956. If all contract options are fully funded, the tanker program would become the largest Pentagon project since 2001, when Lockheed Martin Corp. was chosen to build the Joint Strike Fighter.

The two bidders took different approaches to the contest, with Northrop and EADS offering a larger plane to carry more fuel, cargo or passengers, and Boeing offering an aircraft closer in size to the current fleet.