Business, Economics and Jobs

Boeing wins $35 billion contract to build mid-air refueling tankers


Secretary of the Air Force Michael Donley (2nd-L) speaks as (L-R) Force Chief of Staff Gen. Norton Schwartz, Deputy Secretary of Defense William Lynn, and Under Secretary of Defense for Acquisition Technology and Logistics Ashton Carter listen during a news conference to announce the KC-X tanker contract award Feb. 24, 2011 at the Pentagon in Arlington, Virginia.


Alex Wong

Boeing won a highly contested $35 billion contract Thursday to build the next generation of mid-air refueling tankers, beating out European rival European Aeronautic Defence and Space Co (EADS).

The weapons contract, one of the biggest in history, will provide an estimated 50,000 jobs.

Much of the Air Force's 500-strong tanker fleet has become dangerously decrepit, according to the Washington Post. Many of the aircraft, refitted Boeing 707s from a half-century ago, are among the oldest jets still flying.

The KC-135 aircraft — the equivalent of a flying gas station — entered the fleet in 1956, during the Eisenhower administration, and the last one was delivered in 1965, when Lyndon B. Johnson was in the White House, wrote the Associated Press.

The Air Force announced the awarding of the contract late Thursday after the financial markets closed.

The decision was a blow to EADS, which is based in Paris and Munich The company's chief executive, Louis Gallois, said Friday he was "disappointed and perplexed" by the decision, according to the Wall Street Journal. He said his company would decide on an appeal after being debriefed on the reasons for the decision by Air Force officials on Monday.

EADS, the manufacturer of the Airbus, is seeking to grow its security and defense businesses. The company is the world's leading manufacturer of helicopters.

"Boeing was a clear winner," Deputy Defense Secretary William J. Lynn III reportedly said at a brief Pentagon news conference announcing the decision, adding that considerations in the award were "war-fighting requirements, price and life-cycle costs."

The contract had touched off fierce and costly lobbying. The rival companies spent millions on advertising and hired dozens of lobbyists.

Countering the cries of "buy American," EADS had argued its contract would be carried out by its North American division and said it would create about as many American jobs building the tanker as Boeing.

Sen. Jeff Sessions, R-Ala., whose state stood to gain from EADS winning the contract, said the EADS tanker would be a better value for the taxpayer.

"The EADS plane is by 15 years newer. It's larger. It has more capacity," he said, according to the AP. "Every single capability that's measured, they exceed the Boeing aircraft. So it's a better aircraft. No one can dispute that."

The first 18 of 179 planes, to be called KC-46A tankers, are to be delivered by 2017.

— Freya Petersen