Tankering by Europe

The KC-45A program has initially been awarded to Airbus. This is a huge step for US procurement. After decades of minor buys from European vendors, the USAF has taken its first step into buying a European aircraft on a scale that represents a significant investment. The award today, to Northrop / EADS, for the Airbus 330 tanker could lead to $100 billion in sales to Europe.

The process of confirming the contract has only just started though. Boeing is sure to appeal this decision, which will delay the ultimate contract signing for months, and could potentially change it. Nobody thought the project would be a shoe-in for EADS, in fact it looked like this was Boeings contract to lose. Boeings' biggest beef will likely be EC subsidies to Airbus. But Boeing itself has to be careful it has it's own house in order, and that lose leading R&D projects by the Pentagon aren't seen to influenced it's developments. A very tricky problem.

The Boeing offer based on the 767 was a smaller, but more importantly, an older airframe. There clearly were advantages to using the 767 - it can get into and out of slightly more airports, for one. But the airframes age must also have preyed on selectors minds.

If Boeing fails to win on appeal, the writing is on the wall for the 767. Maybe Boeing will come back later in the program (5 or 10 years down the road) and bid the 787 as a 767 replacement.

The Airbus 330 is a newer airframe design, larger, and in it's tanker role clearly able to do more, with more capacity for fuel, and space for alternative roles.

The Air Force has a history of buying aircraft with one vision, and going in many other directions with the airframe when they are happy with it. The C-135 has an illustrious history in the Air Force, being used for almost anything you can think of. The new C-45 has possibly that same varied life ahead of it.

Northrop / EADS bid included setting up assembly lines in Mobile, AL. This could help Airbus with one issue it has had some trouble with recently - the falling dollar hurting because it pays it's employees in Euros. Mobile employees, one presumes will be paid in green backs. How EADS will see profit in the program will now become a currency exchange issue.

Let the games begin! We hope that the lawyers are not the only winners in this contest.

Update

We are now coming up on the second anniversary of the awarding of the initial Tanker contract, which was then cancelled. The new requirements have not yet been escaped to see the light of day, however it would seem certain that they will be written to make sure a Boeing aircraft will win. In these dark economic times, the Pentagon will likely feel that it has no option but to buy from it's own backyard.

Whether Boeing or Airbus wins, I think this has to be a message to the Pentagon that it's efforts to streamline it's supplier base have been a disaster. They hoped to create just three competitors in the US, building airframes, but as I have said often enough here, they have ended up with three companies that can't compete against each other, and have become islands of engineering. Lockheed-Martin, Boeing and Northrop Grumman are no longer competing. They are monopolies in their own fifedoms. The Tanker contest just went to show how weak this triumvirate has become as a means to competition. The Pentagon engineered this mess. The American Tax Payer is paying through the nose for this mess, and has little redress.

Maybe in 12 months time we can add another update here with more news... but don't hold your breath. :-(