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EADS won’t go it alone on KC-X “soap opera”

written by australianaviation.com.au | March 12, 2010
Northrop Grumman/EADS will not bid their KC-45 (based on the RAAF's KC-30) for KC-X. (Airbus Military)
Northrop Grumman/EADS will not bid their KC-45 (based on the RAAF's KC-30) for KC-X. (Airbus Military)

EADS has confirmed it won’t go it alone in bidding for the USAF’s KC-X tanker replacement after partner Northrop Grumman’s decision not to bid for the program, effectively making the process a one-horse race for Boeing’s 767 based ‘NewGen Tanker’.

EADS CEO Louis Gallois told European media on March 10 that he doesn’t “see any opportunity to come back alone or with others” on the process, while EADS North America CEO Sean O’Keefe later told Aviation Week that his company’s abilities are not sufficiently mature to justify bidding for the US$35bn (A$38.2bn), 179 aircraft deal without its partner. “We’re developing all of those capabilities,” O’Keefe said. “We do not have anything near that in place that would rival that capacity. We could not bring that to the equation alone.”

“Our partners at Northrop Grumman were very concerned with the fixed price contract,” he added. “We were not as concerned.” Under the partnership, EADS subsidiary Airbus would have supplied ‘green’ A330-200 airframes to the joint venture operation in the US state of Alabama where Northrop Grumman would lead on the tanker conversion work, the riskiest part of the process.

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Republican Senator John McCain, who stymied Boeing’s bid for a sole source lease-buy deal on KC-X in 2004 after allegations of impropriety involving a former Boeing executive, told US media that he was “not worried about Boeing, the only competitor left for the contract,” but added that he promised he “will monitor it very closely.”

The decision by Northrop Grumman/EADS to not bid on KC-X has also raided trade tensions in Europe, with French President Nicolas Sarkozy and other French, European Union and German officials warning the US that the decision could affect trans-Atlantic trade. The European view appears to be that, such a decision could not have been made without US government knowledge and, perhaps, intervention. “France regrets the decision which raises questions about whether competition rules are working properly,” AP reported French government spokesman Luc Chatel as saying on March 10.

“It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type,” European Union Trade Commissioner Karel De Gucht said in a statement, according to Deutche Welle. “The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract.”

Boeing CEO Jim Albaugh summed up the KC-X process thus: “It’s the longest running soap opera since Days of Our Lives. I’m not sure that we’ve seen the last episode.”

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