Op-Ed: Boeing gets the Air Force tankers and Airbus earns a future

The battle between the European EADS/Airbus group and Boeing to land a $3.5bn contract for 18 U.S. Air Force refueling aircraft may have been extremely fierce, but everyone – Boeing, Airbus and the American taxpayer - has benefited from it.

The contract for these aircraft had been up for grabs for years and it was initially awarded to EADS (European Aeronautic, Defense & Space Company) in 2008. Boeing contested the decision however and the renewed bidding went Boeing’s way, largely because of its substantially inferior price tag. The Boeing aircraft involved is an adapted version of the wide-bodied 767 jet, which is slightly smaller than the French contender, an adapted version the Airbus A330. It should be remembered that the Americans were in no way obliged to open this contract to bidding from a foreign company, just as Europeans are not obliged to consider American companies although there are exceptions because certain advanced hardware and software items are only produced by America. This explains why American companies have supplied all that country’s refueling aircraft since the 1940’s. The decision to open up this contract to an extremely experienced competitor like EADS has however turned out to be a wise one. Allowing EADS to compete has forced Boeing to cut its prices and production costs and the final contract price was actually less than the one initially proposed by Boeing in 2001. That is an achievement in itself as it has saved hundreds of millions of US taxpayers’ dollars. Not only that, but the planes will be entirely constructed in the USA by American companies, which means thousands of jobs. Furthermore, the 767’s future had been in danger due to orders of the upcoming 787 Dreamliner which meant that the 767 only had an order schedule of 50 planes. On top of that, clients were prepared to wait for the Dreamliner even though it is three years behind schedule. So the refueling plane order has given it a new lease of life. And what’s in it for EADS and Airbus? They are obviously disappointed right now but they have proven themselves capable of competing against Boeing and they will be serious contenders for any upcoming contract which may concern them, and the A330 still has a bright future ahead of it. Cracking the American defense market was an impossible dream just a few short years ago but they have already had one notable success in the form of the contract they were awarded for light helicopters. One European company which has been rewarded for years of persistence and patience is the British company BAE Systems, which supplies various types of equipment to the US military, including tanks. All EADS has to do is to arm itself with patience. The 18-plane contract they have just lost is a relatively small one compared to those to come. The United States Air Force plans to replace all 179 of its ageing refueling aircraft fleet, which is comprised of Boeing KC-135’s which entered service in the 1950’s, and the total contract value is around $30bn. That’s a lot of planes and a lot of money, and EADS will surely be back, more experienced, more aware of American military business culture, and more competitive.