British Go With European Proposal
How much worse could things get for the beleaguered Boeing? In
one word: devastating.
Over the last couple of
years, the aerospace giant has taken a beating from its arch rival,
Airbus, in the commercial aircraft market. Now, the
European-conglomerate is giving Boeing another devastating blow to
its pocketbook, as its wins a huge deal for a fleet of British air
tankers. The United Kingdom announced European Aerospace Defence
& Space (EADS) as the winner of a $24 billion contract to
supply air-refueling tankers to the British Royal Air Force.
On Monday, Britain's Ministry of Defense named Airbus's parent
company the winner in a written statement to Parliament and in
meetings with the competing consortium led by Boeing and EADS. to
some, this is old news, as reports from London during the past two
weeks had already indicated the contract would go to AirTanker, the
EADS-led group, which will supply tankers converted from new and
used Airbus A330 widebody jets.
While the decision to go with EADS will be another nail in the
coffin for the ailing manufacturer, sources say it will not affect
employment at Boeing's Everett plant, where 767s are built. The
Boeing UK proposal had called for converting existing 767s
previously flown by British Airways instead of building new 767
tankers. The company already has plans to use this design in
another much-anticipated defense deal.
Aside from the
immediate success of clinching the multi-billion dollar deal, the
U.K. selection of AirTanker would boost Airbus' burgeoning tanker
business and bolster its chances of someday persuading the Pentagon
to select Airbus tankers for its fleet. Congress and the Defense
Department last year authorized the Air Force to obtain 100 767
refueling tankers from Boeing to begin replacing the aging fleet of
more than 500 KC-135s. The deal is on hold, however, as several
government agencies investigate whether Boeing received the $21
billion contract improperly. While it is doubtful Boeing will lose
the 767 deal all together, this investigation may create a
strategic opening for EADS and its quest to win a portion of
subsequent tanker-replacement contract.
Celia Turner, a spokeswoman for Tanker Transport Service (TTSC),
the Boeing tanker consortium, declined to comment on the timing of
today's Ministry of Defense announcement. But she said the
Boeing-led group remained hopeful.
"The fat lady is not singing yet," said Turner.