Airbus Grounds Boeing’s Plans

After Winning 20 Billion Pound US Contract

EADS, a consortium, which also includes Airbus, has won the US Air Force's 20 Billion Pound contract for military tanker airplanes and this contract has raised the shackles of many Americans who cannot digest the fact as to why the contract was not awarded to Boeing.

EADS will be assembling the military tanker planes in Mobile, Alabama, after they have been manufactured in the Filton and Broughton plants in the UK and other parts of Europe and this deal could secure 9,000 jobs. In addition to the tankers, EADS will also build commercial A330 freighters in the Alabama plant, and even though there is despair in the rest of the United States, the people of Alabama, including their Governor Mr. Bob Riley seem to be happy by EADS decision to set up the assembly plant in their city. The Northrop/Airbus mobile fuel tanker is even bigger than what was offered by Boeing and the Air Force believes that the ability of the Airbus plane to handle additional cargo, fuel, troops and offer more flexibility is what tilted the deal in their favor. These fuel tankers called the 179 tankers will slowly replace the old KC 135 Boeing airplanes. EADS had also quoted a very aggressive price in order to bag the contract.

The Head of the US Air Mobility Command, General Arthur Lichte, however, maintained that since the airplane was assembled in the US, it was an American tanker, which would have the American flag painted on its tail and would be flown by American airmen.

Meanwhile, rival Boeing, already hit by a scandal that resulted in the jailing of its Chief Financial Officer, Mr. Mike Sears and a former US Air Force Acquisitions Officer, Mr. Darleen Druyun in the bungled 2001 tanker deal has to now face defeat in the present deal as well and might even appeal the current decision of handing the contract to EADS. Already politicians from both the Republican and Democratic parties in the US are raising a hue and cry about the decision and promising action right from demanding an explanation from the secretary of Defence, right up to taking the matter to the top most levels of the Pentagon in a bid to pressurize the Government to reverse the decision. Their contention is that the planes should have been built in the USA instead of being outsourced from Europe. But General Arthur Lichte has asked Boeing not to do "anything that would slow down the war fighter." Adding that "We need to get on with this", the General seems to be wishing that the deal progresses smoothly even as Boeing is seeing its monopoly being threatened and its grip loosening over future US Air Force contracts. Boeing’s stocks also fell down to $79.75 after the Pentagon conference. The previous year has already seen EADS make an entry into the US defenses by lifting an Army light helicopter contract.

The Air Force has also claimed that the deal was based solely on merit and that it had been reviewed by the Pentagon and also by the Government Accountability Office and was found to be very open and transparent. The loss of this contract for Boeing means that once the commercial orders of the 767 are completed in 2012, the assembly line in Everett will have to be shut down. There might however, be no loss of jobs as the employees will be transferred to other assembly lines including the 787 Dreamliner. But this loss for Boeing is also more of a moral loss and the chances of creating around 6,000 to 8,000 new jobs in the US have thus been transferred to Europe.

So, EADS has managed to snatch a very important victory from Boeing in its home turf and all eyes are on as to how Boeing maneuvers itself in this dogfight.