Procurement: How AirBus Beat Boeing


March 9,2008: The recent U.S. Air Force decision to buy a new generation of aerial tankers from a European firm (AirBus), rather than U.S. aircraft builder Boeing, shocked many observers. But a close look at the fine print revealed that AirBus beat Boeing in many key areas, and decisively so. The two big factors were superior performance (fewer of the AirBus aircraft were needed to get the job done) and more reliable performance of the suppliers. In this case, it's AirBus's U.S. partner, Northrop, that provided an edge. The air force examined recent project performance by Boeing and AirBus/Northrop, and found that the latter team was more likely to deliver the aircraft on time and at the agreed upon price. Boeing also lost points for providing questionable cost estimates. The air force crunched the numbers of the two proposals and determined that, while 49 of the AirBus tankers would be available by 2013, only 19 of the Boeing version would be ready.

Airbus offered the KC-30, based on the Airbus 330-300, which normally sells for $160 million each. The KC-30 carries 20 percent more fuel than the other candidate, the KC-767, plus more cargo pallets (26 versus 19) and passengers. Thus the KC-30 can stay in the air longer, while transferring more fuel.

The KC-767 is based on the Boeing 767-200 airliner, which sells for about $120 million. The 767 has been in service since 1982, and over 800 have been manufactured so far. Boeing also developed the original KC-135 tanker in the 1950s, and has since built over 2,000 of these.

The two engine KC-30 will officially be known as the KC-45A, and will replace the four engine KC-135. The older aircraft carries 90 tons of fuel and can transfer up to 68 tons. Typically, aerial tankers have to service everything from heavy bombers like B-52s, which carry over 140 tons of jet fuel, to fighters like the F-15 (which carry over five tons of fuel). A two engine KC-767 carries about as much fuel as the KC-135, while the KC-30 carries more. The KC-135 has long made itself useful carrying cargo and passengers, as well as fuel, and both the KC-767 and KC-30 have more capacity for this, with the KC-30 having a decisive edge.

The KC-767 was developed partly because it is about the same size as the KC-135 (wingspan is 156 feet, ten more than the KC-135). Thus the 767 could use the same basing and repair facilities as the 135. That was not a critical factor.

The contract to build 179 KC-45As is worth about $35 billion (about $196 million per aircraft). More than half the work will be done in Europe. The first KC-45s will enter service in five years, rolling out of an assembly plant in the United States. This will give Airbus production facilities in the United States.




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