Boeing unveils tanker for $40 billion deal

WASHINGTON -- Boeing today announced a newly designed KC-767 as its proposed aircraft for a $40 billion Air Force contract competition to replace 179 refueling planes.

The company said at a press conference held in Washington that it tweaked the design of its long-range 767 freighter plane to improve fuel efficiency, among other factors.

Boeing says the basic tanker platform would be built in Everett, then flown to Wichita, Kan., for major military modifications. However, as is the case with the Poseidon program, Boeing would likely do some initial modifications on the Everett assembly line.

If Boeing wins the tanker contract, the likely immediate job impact will be a revival of the engineering design team working on the project.

Boeing is competing against Northrop Grumman Corp., which is expected to offer its KC-30, a modified Airbus A330, at a discounted price.

At stake for both competitors is a multiyear contract to replace a portion of the military's older fleet of KC-135 aircraft, a medium-sized refueling plane made by Boeing. The $40 billion contract is the first installment of an expected three-phase deal that calls for more than 500 planes and could be worth an estimated $100 billion.

In 2004, Boeing slowed production of the 767 to one per month as it sought to keep commercial production going long enough so the assembly line could switch without a significant break to tanker production. The 767 workforce correspondingly shrunk to a minimum.

The Boeing-led team includes Smiths Aerospace, a unit of Smiths Group, Rockwell Collins, Vought Aircraft Industries, Honeywell and Spirit AeroSystems

"This KC-767 advanced tanker will support more than 44,000 American jobs and 300 suppliers," Mark McGraw, a vice president of Boeing's tanker division, said.