Northrop-EADS beats Boeing to build U.S. tanker
Written on March 3, 2008
Northrop Grumman and Airbus parent EADS won a $35 billion U.S. Air Force refueling plane deal on Friday in a surprise blow to Boeing, until now the Pentagon’s sole supplier of aerial tankers.
Northrop Grumman Corp (NOC.N: Quote, Profile, Research) and EADS (EAD.PA: Quote, Profile, Research), “clearly provided the best value to the government,” Sue Payton, the Air Force’s top acquisition official, told reporters at a briefing.
The Air Force plans to buy 179 tanker aircraft over the next 15 years to begin replacing its KC-135 tankers, on average 47 years old, that were built by Boeing Co (BA.N: Quote, Profile, Research).
The decision, which could still be challenged by Boeing or its backers in Congress, caps for now a saga that included a canceled Boeing order and the Pentagon’s biggest procurement scandal in decades — with jail terms for an ex-Air Force weapons buyer and Boeing’s former chief financial officer.
Shares of Northrop, the Pentagon’s No low fees payday loan. 3 supplier after Lockheed Martin Corp (LMT.N: Quote, Profile, Research) and Boeing, rose as much as 6.5 percent in extended trading on Friday. Shares of Boeing, which was widely expected to win the job, fell as much as 5 percent before paring their losses to be down 3 percent.
“A major reversal of fortunes, and a truly surprising outcome,” said Richard Aboulafia, of the TEAL Group aerospace consultancy, about Boeing’s loss.
Boeing said it was disappointed with the outcome and would weigh its options after a detailed Air Force briefing on the reasons for the decision.
“We believe that we offered the Air Force the best value and lowest risk tanker for its mission,” Boeing said.
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