EADS Beats Boeing in Massive US Air Force Deal | Business| Economy and finance news from a German perspective | DW | 01.03.2008
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EADS Beats Boeing in Massive US Air Force Deal

The US Air Force awarded a $35-billion (23-billion-euro) contract to revamp its ageing air refueling tanker fleet to Northrop Grumman and its European partner EADS, snubbing long-favored US plane maker Boeing.

A Boeing 707 tanker plane with two F-18 jet fighters of the Spanish Air Force connected to refueling hoses

The US Air Force will revive its air refueling tanker fleet with Airbus-based planes

The deal, which the Pentagon announced on Friday, Feb. 29, will see Northrup Grumman replace 179 of the Air Force's tanker aircraft, and could potentially lead to a deal to replace all of the force's 600 tankers at a value of up to $100 billion.

In Paris, EADS CEO Louis Gallois described the deal as a "fabulous victory."

"We are very proud to have won a victory on the American market over Boeing," Gallois told France Info radio on Saturday.

The award comes as a heavy blow to the US aviation giant, which has long had an edge over its competitors in procuring military contracts. Bloomberg News reported that an analyst survey had unanimously picked Boeing to win the contract.

25,000 jobs in Alabama

Airbus chairman Louis Gallois

Airbus CEO Louis Gallois is happy about winning a US defense contract

Northrup Grumman's proposed KC-45A tanker is based on the airframe of the Airbus A330 commercial aircraft. Airbus is a subsidiary of the European Aeronotic Defence and Space Company (EADS).

Northrup Grumman plans to build the aircraft at a facility in Mobile, Alabama, which the company in a statement said would employ 25,000 new workers. An initial contract valued at $1.5 billion is for four test tankers.

"We are creating lots of jobs in the United States but we are also creating them in Europe," Gallois said.

The Air Force's current fleet of KC-135 refueling aircraft were built by Boeing in the 1950s and 1960s.

"The KC-45A is the tanker of the future," the commander of Air Mobility Command, General Arthur J. Lichte, said in a statement. "It will enable us to carry more fuel cargo and allow us the flexibility to refuel any type of receiver on every mission."

Secretary of the Air Force Michael W Wynne said the Northrop Grumman award provided better value to the US taxpayer.

Angry Reactions

Workers of Airbus loading the first fuselage sections for an airplane

EADS will build a factory in Alabama

Some US lawmakers reacted angrily to the deal which is widely seen as a major coup for Europe's aviation industry.

Republican Senator Sam Brownback said he was "shocked at this decision and very disappointed."

"I'll be calling upon the Secretary of Defense for a full debriefing and expect there will be a protest of the award by Boeing," Brownback added.

"It's stunning to me that we would outsource the production of these airplanes to Europe instead of building them in America."

Republican Representative Todd Tiahrt said he was "deeply troubled."

He added: "We should have an American tanker built by an American company with American workers," he said.

"I cannot believe we would create French jobs in place of Kansas jobs."

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