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WASHINGTON: Boeing Co. said on Monday it would offer its KC-767 Advanced Tanker for the U.S. Air Force's $40 billion aerial refueling tanker competition, saying the plane would be cost-effective to buy and operate.
The aircraft, which Boeing is already building for Italy and Japan, will be a derivative of the future 767-200 Long Range Freighter and will be produced at Boeing facilities in Everett, Washington, Boeing said.
Northrop Grumman Corp. and its Franco-German partner EADS are offering a variant of EADS' Airbus A330, dubbed the KC-30. Australia has ordered the Airbus tanker and Britain picked EADS as its preferred bidder.
Mark McGraw, Boeing's vice president of tanker programs, told reporters the first of four KC-767s would be delivered to Japan during the first quarter of 2007, with two of four tankers to be delivered to Italy by the end of the year.
He said Boeing was continuing to improve its production process for the 767 and he was confident the KC-767 would be very competitive in terms of its long-term operational and maintenance costs.
The Air Force said it would consider both the value and capabilities of the bids and a higher-priced bidder could win if its overall approach outweighed the cost.
The Airbus A330 sells on the commercial market for about $160 million. Boeing's 767-200 sells for about $120 million. Analysts expect Northrop to heavily discount the KC-30, which can carry more fuel, cargo and passengers than the 767.
John Sams, who heads Air Force programs for Boeing, gave no details on pricing, saying only: “We need to make every effort to be as competitive as possible.”
The Air Force plans to pick a single bidder to build 179 planes over the next 15 years and says it will decide later how to replace the rest of its aging fleet of KC-135 tankers.
Currently, the Air Force said it has grounded 41 of KC-135E models for corroded engine struts, as well as four KC-135Ds. Officials said the advancing age of the tanker fleet would make further delays in the tanker program problematic.
Congress in 2004 killed a $23.5 billion Air Force proposal to lease and buy 100 Boeing 767 tankers after numerous studies found problems with the earlier competition.
Boeing had a backlog of 28 orders for 767s at the end of 2006 and added 27 more orders from United Parcel Service recently, said Beverly Wyse, who heads Boeing's commercial 767 sales. She said Boeing could add a few more orders this year.
Sams said other countries were also considering buying tankers, including South Korea, the United Arab Emirates, Saudi Arabia and France. In addition, he said Boeing also hoped to sell more tankers to Italy and Japan.
Boeing officials said the KC-767 had several advantages compared with the existing tanker fleet and the competitor being offered by Northrop and EADS. They said it could carry more fuel at takeoff from a shorter runway than the KC-135s and carry more than three times the cargo than the KC-135.
McGraw noted Boeing decided to offer the 200 version of the 767, rather than the extended 767-300 version, because the 300's greater length adversely affected the plane's refueling capabilities and required more fuel to operate.
The KC-767 is 159 feet long and can carry 19 military pallets, while the KC-30 is 193 feet and can carry 32 pallets.
Sams conceded the A330 was larger, but said Air Force data showed KC-135s were used to carry cargo in less than 1.8 percent of recent missions. He said the Air Force had also stressed that aerial refueling was its biggest priority.
