Boeing considers appeal after losing $35bn contract to EADS

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The Independent Online

US aerospace giant Boeing is considering appealing against the Pentagon's surprise decision to award a $35bn (£17.6bn) aircraft contract to its rivals Northrop Grumman and EADS.

The US government handed the contract – to build up to 179 aerial refuelling tankers – to a consortium led by Los Angeles-based Northrop and European aerospace group EADS, the owner of Airbus, late on Friday. Boeing widely tipped as a shoo-in for the deal – one of the largest aviation contracts ever to be up for grabs – and will decide whether or not to push ahead with an appeal once it has spoken with US Air Force officials on 12 March.

The order is initially for just four KC-45A air-to-air refuelling tankers, worth $1.5bn, but with a view to producing up to 169 planes in total. The KC-45A will be based on Airbus's A330 aircraft, and the exterior will be made in Europe, after which the planes will be flown to Mobile, Alabama, for construction of the interior.

The Air Force said strict procedures had been followed in deciding who should be awarded the deal, explaining that the selection had been made on a "best value" basis.

US Secretary of the Air Force Michael Wynne said: "[This] announcement is the culmination of years of tireless work and attention to detail by our acquisition professionals... who have been committed to maintaining integrity, providing transparency and promoting a fair competition for this critical aircraft program... we believe [this] will provide a higher-value resource to the warfighter and the taxpayer."

Boeing lost the contract in spite of offering a cheaper proposal – believed to be worth around $35m per plane. However, analysts said they believed the US group would have a very slim chance of overturning the decision on appeal, "...because the Northrop plane seemed markedly superior," said Loren Thompson, a defence industry analyst for the Lexington Institute.

The contract will help to secure up to 9,000 British jobs with EADS, who will make the wings for the planes, and provides a major breakthrough for the European defence company after a difficult few years.

European politicians said awarding the contract to EADS also demonstrated that relations between the US and France were thawing. "I pay tribute to the fairness of the US administration," said Louis Gallois, EADS' chief executive, speaking on French television at the weekend. "I think the new climate between France and the United States had something to do with it.

President Sarkozy echoed Mr Gallois' comments, issuing a statement at the weekend: "[The contract] marks an important advance in strengthening relations between the United States and Europe which, spurred on by the [French] president, owes a lot to the re-establishment of a confident dialogue between Paris and Washington.

However, US politicians were outraged by the decision to award the contract outside of the US. "We should have an American tanker built by an American company with American workers," said Republican Representative Todd Tiahrt, who represents the district in Wichita where Boeing would have performed much of the work on the tanker work.

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