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Originally published February 29, 2008 at 12:00 AM | Page modified February 29, 2008 at 8:32 PM

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EADS/Northrop trumps Boeing in Air Force tanker competition

Boeing has lost the long-awaited and lucrative Air Force refueling tanker contract to a competing bid based on an Airbus airplane, Air Force...

Seattle Times aerospace reporter

Competing tankers

The contract: The Air Force is awarding an initial $40 billion contract to replace 179 Eisenhower-era tankers. All 530 tankers in the fleet will be replaced eventually, so two big follow-on contracts will be in play. The total cost could exceed $125 billion.

Boeing's KC-767 tanker

Fuel storage capacity:202,000 pounds

Pallet capacity (main deck): 19

Passenger/troop capacity:190

Height:52 feet

EADS/Northrop Grumman's KC-30 tanker

Fuel storage capacity:250,000 pounds

Pallet capacity (main deck): 26

Passenger/troop capacity:280

Height:57 feet

Source: Seattle Times news services

A long and bumpy flight

The tanker contract has had a remarkably tangled history.

October 2001: As the airline industry struggles following the Sept. 11 terrorist attacks, the Air Force proposes to lease 100 air-refueling tankers from Boeing at a cost of $20 billion or more. Sen. John McCain quickly becomes the chief critic, calling it "a sweet deal" for Boeing that will cost taxpayers more than alternative plans.

November 2003: Boeing fires CFO Mike Sears and VP of missile defense systems Darleen Druyun after concluding Sears improperly offered her a job in October 2002 while she was a top Air Force acquisitions officer overseeing the tanker contract. Boeing CEO Phil Condit resigns a week later.

May 2004: Defense Secretary Donald Rumsfeld effectively scraps the tanker leasing deal.

February 2005: CEO Harry Stonecipher says Boeing may close the slow-selling 767's Everett production line pending a tanker decision. The line stays open, though.

September 2005: Northrop Grumman officially teams up with EADS, the parent of European aircraft-maker Airbus, to bid for the contract.

April 2006: The Air Force formally re-opens its procurement process for replacing tankers.

January 2008: Airbus chief says EADS will assemble commercial jets as well as Air Force tankers in Mobile, Ala., if his team wins.

February 2008: EADS/Northrop trumps Boeing in Air Force tanker competition

Sources: Seattle Times archives and news services

Boeing has lost the long-awaited and lucrative Air Force refueling tanker contract to a competing bid based on an Airbus airplane, Air Force officials said Friday.

The newly named KC-45A plane will be produced by a partnership between Europe's EADS and Northrop Grumman, Air Force Secretary Michael Wynne said.

The outcome is a shocking upset, kept secret until just before the formal announcement today.

The Boeing loss means that the 767 assembly line in Everett will wind to a close around 2012 when the current commercial orders run out.

No layoffs are likely as workers will transfer to other programs. But Washington State has lost out on the chance to add as many as 9,000 jobs.

Until now, Boeing has had a monopoly on the supply of large air tankers to the U.S. military. But Northrop Grumman, in partnership with Airbus parent EADS, will build the next generation tankers using a modified Airbus A330 instead of the Everett-built 767 Boeing had put forward.

The deal, worth about $40 billion over two decades, is for the supply and maintenance of 179 tankers replacing old Boeing-built KC-135 airplanes.

Air tankers — which connect via flexible hoses and rigid booms to fighter jets and bombers in flight, enabling them to refill their gas tanks on long-range missions — are central to the projection of U.S. air power across the globe.

So the Air Force selection of an airplane designed and largely built in Europe breaks new ground in the world of defense contracts and is a mighty blow to Boeing's prestige.

The competition has loomed large in the Boeing psyche.

It had hoped to finally exorcise the hit to its reputation connected with the scandalous collapse of the original 2001 tanker deal and the threat of letting its main foreign competitor enter the U.S. defense market on a big contract.

Yet perhaps the most important aspect of the loss for Boeing is the new competitive threat from EADS: its European rival will now go ahead with its plan to build a widebody jet factory in Mobile, Ala., that will churn out commercial A330 freighters as well as the military tanker airplanes.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2008 The Seattle Times Company

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