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EADS beats Boeing to US tanker deal

Washington, March 1, 2008

Northrop Grumman and Airbus parent EADS has won a $35 billion US Air Force refueling plane deal in a surprise blow to Boeing, until now the Pentagon's sole supplier of aerial tankers.

Northrop Grumman Corp and EADS, '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.

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.3 supplier after Lockheed Martin Corp and Boeing, rose as much as 6.5 per cent in extended trading on Friday. Shares of Boeing, which was widely expected to win the job, fell as much as 5 per cent 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.-Reuters




Tags: EADS | US | Boeing | Pentagon | deal | aerial | tankers |

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