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Airbus reportedly slashes price to win US military tanker project

AFP · 12 Jul 2010, 16:13

Published: 12 Jul 2010 16:13 GMT+02:00

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Airbus has cut the proposed cost for the contract to build 179 aerial refuelling tankers by at least 10 percent from the level in a previous offer in 2008, the Financial Times Deutschland (FTD) reported, citing industry sources.

Last week, the two competitors submitted their offers to Washington, setting the stage for a high-stakes transatlantic trade scrap. It will be the third time the contract has been awarded.

In 2003, Boeing won the deal, but the decision was overturned after a conflict of interest emerged between the Pentagon and the aircraft manufacturer.

Five years later, Airbus won a second call for proposals in a joint bid with US firm Northrop Grumman but again the decision was annulled when the US Government Accountability Office found the offers were incorrectly analysed.

Northrop Grumman subsequently withdrew from the race triggering uproar in Europe with French President Nicolas Sarkozy and German Chancellor Angela Merkel accusing Washington of bias in favour of the all-American Boeing plane.

The Air Force is expected to make its decision by November 12.

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The project, worth an estimated $35 billion to $40 billion (€27.7 to €31.5 billion), is seen as crucial for bolstering US air power and will be a financial boon for the winning firm.

The FTD said that the deal could be worth as much as $100 billion when follow-up contracts were taken into account.

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Your comments about this article

22:18 July 13, 2010 by wenddiver
This company is wasting time and money. The Pilots want the Boeing and the US Government isn't going to force what the pilots consider an inferior plane on them in a time of conflict.. Especially, when those same pilots are not granted re-fueling rights by France when they fly combat missions near France enrote to the Middle-east.

Boeings are famous for being incredibly tough and bringing their crews home, no matter how badly shot up.
19:10 July 14, 2010 by Beachrider
Military purchases are rarely decided by pilots. This one won't be. There will be Boeing, EADS and Russian bids.

The problem wasn't that the Airbus was inferior, it was that EADS was proposing costlier+larger tankers. The US already has a larger tanker and isn't retiring it (KC-10), so a bigger tanker isn't an advantage.

Tankers are about reliable operation, so that documentation would be relevant.

We ARE replacing KC135, a 50-year-old 707-variant, so all three bids should vastly improve on what-we-have.
22:57 July 15, 2010 by JohnnesKönig
I cannot imagine that the US govt would give much needed work to another nation. But then again, that would be logical. Which seems to be a commodity in the govt these days...
19:49 July 24, 2010 by Logic Guy
Well, I personally would be surprised if they awarded the contract to Airbus, even if Airbus does offer a better deal.

Sometimes life is not about money.
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