fantassin
02-24-2005, 02:56 AM
EADS seals $25bn UK air tanker deal
By Peter Spiegel in London
Published: February 23 2005 22:46 | Last updated: February 2
Airbus parent EADS has won the battle to secure "preferred bidder" status for a contract to supply a $25bn (£13bn) fleet of air-to-air refuelling tankers to the UK's Royal Air Force. The deal is critical to EADS's push to break Boeing's global monopoly on military refuelling.
The announcement, bringing more than a year of intense and sometimes rancorous negotiations to a close, is expected early next week. Although it will fall short of an official contract signing, people briefed on the decision said the MoD would name the EADS-led partnership AirTanker as the programme's preferred bidder.
This would clear the way for the consortium to seek bank financing for the project.
The MoD would only say the ministry expected an announcement soon, and AirTanker declined to comment on timing, saying: "We remain optimistic."
AirTanker was originally selected to supply the RAF with more than a dozen refitted A330s in January 2004, following intense competition with Boeing.
It had been expected that "preferred bidder" status would be awarded after about three months of talks but disputes between EADS, the MoD and the Treasury over the deal's terms threatened to kill it. In letters obtained by the Financial Times last year, Sir Peter Spencer, head of MoD procurement, repeatedly threatened to abandon the talks because of EADS's refusal to shoulder more risk if the aircraft failed to perform.
People briefed on next week's announcement said the decision to move forward indicated that differences over termshad largely been ironed out. It also signals the Treasury's support.
The biggest prize in the tanker battle remains the US Air Force, which is expected to begin ordering as many as 500 aircraft before the end of the decade. Boeing had won an initial contract to convert 100 767s into tankers, but the deal collapsed after revelations that a senior air force procurement official illegally steered the contract to Boeing in return for a job.
The UK's decision to move forward with its A330 programme comes as EADS seeks a manufacturing site in preparation for a bid to convert A330s into tankers for the US air force. Without a signed contract in the UK, the Franco-German group - which faces congressional opposition as a foreign company - would have found it very difficult to convince the Pentagon its bid is credible.
A decision on requesting bids for the US air force contract is not expected to come until the middle of the year, when a study by Rand on tanker options is completed. Boeing officials have said they may need to shut down its 767 line in June if no decision has been made by then.
Under the UK deal's terms, AirTanker will own the aircraft and the RAF will lease them when needed. Sir Peter, backed by the Treasury, had refused to agree a deal without EADS taking the full risks of ownership.
EADS must now raise financing for the aircraft, which could delay final agreement by more than a year.
http://news.ft.com/cms/s/655e17f0-85e7-11d9-9011-00000e2511c8.html
By Peter Spiegel in London
Published: February 23 2005 22:46 | Last updated: February 2
Airbus parent EADS has won the battle to secure "preferred bidder" status for a contract to supply a $25bn (£13bn) fleet of air-to-air refuelling tankers to the UK's Royal Air Force. The deal is critical to EADS's push to break Boeing's global monopoly on military refuelling.
The announcement, bringing more than a year of intense and sometimes rancorous negotiations to a close, is expected early next week. Although it will fall short of an official contract signing, people briefed on the decision said the MoD would name the EADS-led partnership AirTanker as the programme's preferred bidder.
This would clear the way for the consortium to seek bank financing for the project.
The MoD would only say the ministry expected an announcement soon, and AirTanker declined to comment on timing, saying: "We remain optimistic."
AirTanker was originally selected to supply the RAF with more than a dozen refitted A330s in January 2004, following intense competition with Boeing.
It had been expected that "preferred bidder" status would be awarded after about three months of talks but disputes between EADS, the MoD and the Treasury over the deal's terms threatened to kill it. In letters obtained by the Financial Times last year, Sir Peter Spencer, head of MoD procurement, repeatedly threatened to abandon the talks because of EADS's refusal to shoulder more risk if the aircraft failed to perform.
People briefed on next week's announcement said the decision to move forward indicated that differences over termshad largely been ironed out. It also signals the Treasury's support.
The biggest prize in the tanker battle remains the US Air Force, which is expected to begin ordering as many as 500 aircraft before the end of the decade. Boeing had won an initial contract to convert 100 767s into tankers, but the deal collapsed after revelations that a senior air force procurement official illegally steered the contract to Boeing in return for a job.
The UK's decision to move forward with its A330 programme comes as EADS seeks a manufacturing site in preparation for a bid to convert A330s into tankers for the US air force. Without a signed contract in the UK, the Franco-German group - which faces congressional opposition as a foreign company - would have found it very difficult to convince the Pentagon its bid is credible.
A decision on requesting bids for the US air force contract is not expected to come until the middle of the year, when a study by Rand on tanker options is completed. Boeing officials have said they may need to shut down its 767 line in June if no decision has been made by then.
Under the UK deal's terms, AirTanker will own the aircraft and the RAF will lease them when needed. Sir Peter, backed by the Treasury, had refused to agree a deal without EADS taking the full risks of ownership.
EADS must now raise financing for the aircraft, which could delay final agreement by more than a year.
http://news.ft.com/cms/s/655e17f0-85e7-11d9-9011-00000e2511c8.html