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Subject: Northrop, EADS Tanker
JIMF    9/8/2005 3:56:47 PM
Not a fighter, bomber or recon, but does EADS now have a shot at building tankers (in the U.S. of course) for the Air Force. What do you think? Northrop, EADS Join On Air Force Proposal The Wall Street Journal 09/08/05 author: Jonathan Karp (Copyright (c) 2005, Dow Jones & Company, Inc.) European Aeronautic Defence & Space Co. will join Northrop Grumman Corp. of the U.S. to compete to supply U.S. Air Force refueling planes, forging a marriage that will test the U.S. Defense Department's tolerance for trans-Atlantic partnerships and potentially opening a new front in a trade dispute over airplane subsidies. As expected after months of discussions, Northrop and EADS, the main parent of Airbus, said they will jointly compete to replace aging U.S. aerial-refueling tanker planes, a multibillion-dollar market that has long been dominated by Boeing Co. The push for competition follows the collapse amid Air Force procurement scandals and U.S. Senate scrutiny of a previous $23.5 billion (€18.8 billion) proposal to acquire tanker planes from Boeing. Despite the significance of the venture for both Los Angeles-based Northrop and EADS, Northrop made the announcement in a low-profile statement that appeared crafted to deflect political opposition to the alliance. EADS, which sees the tanker program as critical to its U.S. expansion strategy, wasn't mentioned until the third paragraph. The European company's role was described as a "principal subcontractor and teammate," whose responsibility will be to supply the airframe, based on Airbus's A330 passenger jet. Northrop stressed that the aircraft is to be assembled at an EADS site in Mobile, Alabama, that its content will be mostly American and that the program should create more than 1,000 American jobs. Northrop will perform systems and integration work, though it hasn't yet decided on a location. "This aircraft will be made in America, by Americans for the U.S. military," said Northrop spokesman Randy Belote. The likelihood of the Northrop-EADS alliance has ignited U.S. congressional opposition because of a continuing World Trade Organization dispute between Washington and the European Union over commercial-airplane subsidies. The U.S. House is seeking to bar EADS from receiving big U.S. defense contracts. Rep. Norm Dicks, a Washington Democrat who champions Boeing, has been vocal in his disappointment with Northrop's move. "It's a Northrop-led proposal, but it's based on an airframe that was subsidized by what the U.S. government considers an illegal trade practice," said George Behan, Rep. Dicks's press secretary. Boeing sought to distance itself from the trade controversy. "With 75 years of experience in tanker technology, we look forward to the competition once the Air Force defines its requirements. All we ask for is a level playing field," said Walt Rice, a spokesman for Boeing's defense unit. Though the U.S. Defense Department recently has awarded sensitive contracts, such as the new fleet of presidential helicopters, to multinational partnerships, the Northrop-EADS alliance will come under greater scrutiny, according to Loren Thompson, a defense analyst with the Lexington Institute think tank in Arlington, Virginia. That's because of the higher potential value of the future tanker contract, the controversy surrounding the previous attempt to acquire Boeing tankers and the fact that EADS is Franco-German led, rather than led by Washington's closest European allies. Still, Mr. Thompson said, Northrop may benefit because its proposed tanker is larger than Boeing's modified 767 airliner. "The Air Force is leaning toward a larger plane as it rethinks the requirements for its tankers," he said. The U.S. Air Force is awaiting the Defense Department's review of studies before deciding how to proceed with modernizing its aging fleet of tankers. Defense-industry officials expect a competition for new tankers to begin next year, and some say that the emergence of a rival to Boeing could prompt the U.S. to split its tanker purchases between companies. Northrop has said that the business opportunity for tankers ranges from $25 billion to $100 billion.
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MadRat    RE:Northrop, EADS Tanker   9/9/2005 12:45:27 AM
Can't work, its too win-win.
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