Pentagon’s tanker order brings British aerospace boom

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By Dominic O’Connell

BRITISH aerospace firms were celebrating an order bonanza this weekend, after EADS, the parent company of Airbus, won a $35 billion (£18 billion) Pentagon contract for tanker aircraft.

Senior executives said the deal was the second-largest contract for UK aerospace after BAE Systems’ 1989 agreement to supply combat aircraft to Saudi Arabia.

Airbus will make the wings for the tankers, modified versions of the A330 commercial airliner, at its UK plants in Broughton and Filton. The company said the contract would bring in $6 billion worth of work and help secure 9,000 British jobs.

Another big winner is Cobham, the British engineering group that pioneered inflight refuelling. It will make the high-tech equipment needed to safely transfer fuel between aircraft.

The deal would bring it $1 billion in sales, said chief executive Allan Cook. “This is a huge boost to our business, and to the whole UK supply chain,” he said. “We put a lot of time and effort into the bid, and I am delighted it has paid off.”

Boeing was regarded as a shoo-in for the contract, with defence pundits backing Washington’s desire to foster the domestic aerospace industry.

But late on Friday the Pentagon said it had chosen Airbus planes as its new tankers, not Boeing’s.

The initial contract is for 68 aircraft, but it is expected to be extended to 179 over the next decade, making it one of the largest aerospace orders ever.

Defence analysts think it could grow even further, noting that the US Air Force has about 500 tanker aircraft in its fleet.

As well as Airbus UK and Cobham, the British arm of GE Aerospace Systems will benefit as a major supplier.

The winning bid was led by North-rop Grumman, the giant US defence contractor. It offered an “Americanised” version of the A330, promising that 58% of the value of the tanker aircraft would come from domestic companies. Airbus will build the planes in Europe, and then fly them to a plant in Mobile, Alabama, for fitting out.

The approach is similar to that taken two years ago when Fin-meccanica, an Italian aerospace group, scooped a deal to supply new helicopters to Marine Force One, the presidential transport service. Its bid was headed by Lockheed Martin, another big American defence company.

The decision is a stunning reversal for Boeing, which had ruled the international market for military tankers. EADS has eroded its dominance in recent years with contract wins in Germany, France, Australia and the UK.

Boeing said it would study the decision before making its next move. It offered its 767 aircraft in competition with the A330. The 767 production line, in Seattle, Washington state, now has question marks over its future.