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Boeing could file formal protest over US Air Force's tanker contract shocker

Boeing Co said late on Friday it would give "serious consideration" over the weekend to filing a formal protest of the US Air Force's decision to award a US$35 billion tanker contract to European Aeronautic Defence and Space Co (EADS) and Northrop Grumman Corp.

Following a debriefing by Air Force officials on Friday, Boeing said in a statement that reports of it losing the competition by a wide margin were inaccurate.

Mark McGraw, a Boeing vice president and program manager of the aerial refueling tanker program, also said company officials had "significant concerns about the process in several areas, including program requirements related to capabilities, cost and risk, evaluation of the bids and the ultimate decision."

The previous week, the Air Force had surprised most people paying attention to the high-stakes contract by announcing that EADS, the parent of Boeing rival Airbus, and Northrop Grumman of Los Angeles would replace the first 179 planes in its aging fleet of nearly 600 air-to-air refueling tankers.

The decision sparked a fierce backlash on Capitol Hill, led by lawmakers from states that would have gained jobs had Boeing won the contract.

If Boeing decides to appeal the decision, the protest would go to the Government Accountability Office.

Separately, supply chain troubles and production problems could force Boeing to further delay the first flight of its new 787 jetliner, analysts said on Friday.

Boeing said it was evaluating the schedule, but that its goal was still to power up the plane early next month and send it on its first flight by the end of June.

In January, the aircraft maker announced a third major delay in the 787 program, pushing the delivery date for the first plane into early next year and saying it would assess its timeline for getting the aircraft off the ground.

Goldman Sachs analyst Richard Safran wrote in a note to investors on Friday that he expected 787 deliveries to be delayed, possibly into the third quarter of next year.

"Boeing continues to underestimate the amount of work required on the 787," Safran wrote. The analyst cut his expectations for deliveries next year to 50 planes from 80.

Boeing spokeswoman Yvonne Leach said deliveries could happen early next year and that the assessment was incomplete.

The company has received orders for about 850 of the 787 from more than 50 customers.
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