In a surprising decision, the Pentagon announced today that Boeing would be awarded a $35 billion contract to replace the Air Force’s aging aerial tanker fleet, beating its rival Airbus who many had thought was the favorite to receive the contract the New York Times reports.
The decision doesn’t come without controversey as the Pentagon had originally awarded the contract to a joint bid by EADS (parent company of Airbus) and Northrop Grumman back in 2008 only to have the deal fall through after Boeing was able to successfully appeal the decision.
Northrop Grumman pulled out of the bid after the decision was appealed but many analysts still expected Airbus to be the favorite since the plane it was offering, a modifed A330 was larger than the modified 767 that Boeing was offering. That, along with the fact that Airbus planned to assemble the tanker in Mobile, Alabama, bringing thousands of American jobs with it, made it seem possible, even likely, that the Pentagon would award the large contract to a non-American company.
While the decision by the Air Force to award the contract to an American company will be welcomed by many politicians in Washington, there were several representatives from gulf states, where Airbus planned to assemble the plane, who are already voicing their dissatisfaction with the Boeing win according to The New York Times article.
And the choice could still face opposition from lawmakers on the Gulf Coast, who were counting on EADS’s promise to build an assembly plant in Mobile, Ala., that would have created thousands of jobs.
“I’m disappointed but not surprised,” Senator Richard C. Shelby, Republican of Alabama, said. “Only Chicago politics could tip the scales in favor of Boeing’s inferior plane. EADS clearly offers the more capable aircraft. If this decision stands, our warfighters will not get the superior equipment they deserve.”
Investors on Wall Street were encouraged by the decision as Boeing’s stock was trading up 3.5% in after-hours trading only minutes after the decision was announced.
The first tankers are expected to be delivered in 2017 with a total of 179 planes produced by the end of the contract. The total value for Boeing could reach $100 billion by the time the military finishes upgrading its entire fleet.