USAF awards $35 billion tanker deal to Northrop/EADS combine

01 March 2008

Washington: The US Air Force on Friday awarded Los Angeles-based Northrop Grumman Corp and its European partner, European Aeronautic Defence and Space Co, (EADS), a $35 billion contract to build airborne refueling planes. The contract is a turning point in many ways for both EADS and front-runner Boeing Co.

Boeing, held a virtual monopoly on the supply of tankers to the USAF providing all its tankers over the previous 50 years, including the current tanker, KC-135.

For EADS, this is a significant moment for it is one of those rare occasions when a European firm has been able to break into the intensely competitive, and lucrative, US arms market. On offer by the Northrop-EADS combine was the Airbus A330 platform.

US Air Force officials have been quoted as saying that the larger size of the Northrop-EADS aircraft helped tip the balance in its favor.

The contract for up to 179 aircraft, will be one of the first of three awards worth up to $100 billion over 30 years. As winners of the first award, EADS and Northrop will now be strongly placed to win two follow-on deals for hundreds of additional planes.

The US Air Force, which was long overdue to replace its air-to-air refueling tankers, continues to fly 531 1950's-era tankers, along with another 59 tankers built in the 1980s by McDonnell Douglas, now part of Boeing.