Boeing Co won a US$30 billion contract for 179 new US Air Force refueling planes on Thursday, trumping arch rival Airbus parent EADS in a fiercely contested competition that began nearly a decade ago.
It was the third effort since 2001 to start replacing 50-year-old Boeing-made KC-135 Stratotankers, built before man first stepped on the moon.
“Boeing was the clear winner,” US Deputy Secretary of Defense William Lynn told reporters at the Pentagon.
Photo: Reuters WARNING: EXCESSIVE CONSUMPTION OF ALCOHOL CAN DAMAGE YOUR HEALTH
He said Boeing offered a far better deal at a time when defense budgets are under increasing pressure.
Boeing’s shares rose 3.9 percent in afterhours trading on the news, which gave the Chicago-based aerospace giant a solid win as it struggles to gets its ailing 787 Dreamliner commercial airplane program back on track.
EADS expressed disappointment and concern about the decision, but said the contract was just “one business opportunity among many” in the US.
EADS said last week it would only protest the contract if it saw egregious errors.
Boeing was “humbled” by the win, said Dennis Muilenburg, chief executive of Boeing’s defense unit. He gave no details on pricing, but said Boeing was able to cut costs by working more closely with its commercial wing and making substantial investments to improve its 767 production line.
Muilenburg added that the Boeing plane was smaller, used 24 percent less fuel and would result in less reconstruction costs for military airports.
US Air Force Secretary Michael Donley said the initial US$3.5 billion fixed-price contract would pay for design, development and delivery of 18 planes by 2017, but could be worth more than US$30 billion in coming years.
Previous Air Force efforts to buy new planes to refuel other aircraft during flight have been marred by an ethics scandal and selection errors.
The contest has sparked trans-Atlantic tensions and clashes among US lawmakers eager to bring high-paying aerospace jobs to their states.
Analysts were caught off guard by the contract, given predictions that EADS would aggressively underbid Boeing.
Teal Group’s Richard Aboulafia called the decision “a major surprise” and said if it holds, Boeing will have succeeded in blocking EADS’ biggest defense initiative.
Lynn said EADS could protest the decision, but said Pentagon officials were convinced the decision was fair.
“We think we’ve established a clear, a transparent and an open process and we think we’ve executed on that and it will not yield grounds for protest,” Lynn said
EADS is waiting until after a formal briefing by the Air Force, which is likely to occur on Wednesday, to decide what to do, but its statement appeared to look to future opportunities to do business with the US military.
EADS has 10 days to file a formal protest after a contract award and its congressional backers can also try to block the award legislatively.
EADS and Boeing, arch rivals in the market for passenger jets, have fought bitterly in public over the contest with expensive advertisements while their respective supporters have battled it out at dueling news conferences.
US defense officials, who kept the news under wraps until it was announced at the Pentagon, gave few details about the bids, saying only that the offers were more than 1 percent apart.
Documents from the previous competition showed an average price for the Airbus plane of US$160 million versus US$168 million for the Boeing plane, but analysts say the price could be 5 to 10 percent lower this time.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last