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Boeing, EADS submit final bids for US tanker deal

by Staff Writers
New York (AFP) Feb 10, 2011
US aerospace giant Boeing and European rival EADS said Thursday they were submitting their final bids to the US Air Force for a hotly contested, $35 billion aerial refueling tanker contract.

After nearly a decade of Air Force attempts to replace 179 tankers from an aging fleet of Boeing KC-135s dating back to the 1950s, the battling companies unleashed a volley of announcements Thursday, a day ahead of the deadline.

Boeing said it had delivered its bid, while European Aeronautic Defence and Space, the parent of France-based Airbus, said it was going to submit its own final proposal ahead of the deadline Friday morning.

Analysts expect the Air Force to announce its decision on the contract, valued at about $35 billion, in March.

The head of Boeing, Jim McNerney, said that the US aerospace giant was offering "an aggressive but responsible bid."

Speaking to investors at an aerospace and defense conference in New York, the Boeing chief executive said it was "impossible for me to know what the chances are" to win the contract "against a subsidized competitor," European rival Airbus.

"Their cost of capital is lower than mine," he said, touching on the subject of a long-running trade dispute between the United States and the European Union over subsidies to Boeing and Airbus.

EADS is competing for the military contract without a main partner, but with support from a number of US equipment makers.

Guy Hicks, spokesman of EADS North America, noted that the Air Force's deadline for final proposal revisions is at 8:00 am (1300 GMT) Friday.

"We will be fully responsive to that deadline. We remain in an intensively competitive situation and will not provide specifics."

Both companies are offering militarized versions of their commercial aircraft.

Boeing is proposing the KC-767, based on its long-haul 767 plane that entered service in 1982. Dubbed the "NextGen Tanker," the plane is smaller than the Airbus plane and is to be assembled in Everett, Washington, and equipped in Wichita, Kansas.

Boeing says its plane will save $10 billion in fuel over 40 years of service and entail maintenance costs that will be 15 percent to 20 percent lower than those of the plane built by France-based Airbus.

The EADS KC-45 is based on the long-haul Airbus 330, in service since 1993. EADS says it has 31 percent more capacity and a longer range than the KC-767.

But the KC-45, bigger than its rival, could have higher fuel costs and require the construction of new hangars. It would be assembled in Mobile, Alabama.

This will be the third time in nearly a decade the Air Force has tried to secure a contract for the planes.

At first awarded to Boeing in 2003, the Pentagon was forced by Congress to cancel the contract due to irregularities in the process.

In 2008, EADS and US partner Northrop Grumman won the bid, but the decision was withdrawn after the congressional watchdog, the Government Accountability Office, upheld Boeing's objections.

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