Boeing wins U.S. tanker contract

British aerospace and defense company Cobham PLC (COB.LN) was one European beneficiary of a controversial decision by the U.S. to award an aerial tanker refueling contract to Boeing Co (BA) over European rival European Aeronautic Defence & Space Co. (EAD.FR).
Cobham Friday said it had been selected by Boeing to provide hose and drogue aerial refuelling systems for use on the new KC-46A tanker aircraft selected for use in the U.S. Air Force. A drogue is the funnel-shaped device at the end of the hose that is the connection target for aircraft attempting to refuel from the tankers.
The British company will manufacture the systems at its specialist air-to-air refuelling facility in Davenport, Iowa, which has been updated to provide the new systems. It said it expects the deal to include equipping each of the 179 tankers which are expected to be ordered with a centreline drogue system and about 30 tankers with a pair of wing-mounted refueling pods. It said it will provide more details about the scope of work and potential value once the contract has been defined.
The Pentagon awarded Boeing a contract worth more than $30 billion for aerial refueling tankers, closing a chapter in a controversial and tortured bidding contest, but potentially launching a fresh trans-Atlantic political controversy. The move is likely to feed perceptions in European capitals that the U.S. defense market -- the biggest in the world -- remains largely closed to European defense suppliers.
EADS' bid for the contract had been backed by several state governors, as the European company had proposed building its tanker at a new facility in Mobile, Alabama. In announcing the award, Deputy Secretary of Defense William Lynn emphasized the Pentagon's new focus on cost savings and said the deal "favored no one but the taxpayer and the war fighter."
EADS North America Chairman Ralph Crosby called the news "certainly a disappointing turn of events, and we look forward to discussing with the Air Force how it arrived at this conclusion." Pentagon officials said that both firms would have to wait for a formal debriefing before any protest could be filed.
Cobham would likely have benefited even if the contract had been awarded to EADS. Cobham spokesman Greg Caires told Dow Jones Newswires that the company had two fire-walled teams working with Boeing and EADS. The company acquired the Davenport facility in 2003 from Northrop Grumman.
Cobham's Davenport plant has been producing air refuelling systems for over 50 years, and currently produces systems for the C-130 Hercules refuelling tanker made by Lockheed Martin Corp, the plane currently used for air-to-air refueling by many air forces across the world, including the USAF. Cobham is the world's biggest provider of hose and drogue systems.