The European plane-building company that lost out on a $35 billion refueling tanker deal said Friday it isn't appealing the Air Force's decision to go with Chicago-based Boeing.
The European Aeronautic Defence and Space Co. said Friday it won't ask the Pentagon to review the decision to have Boeing build nearly 200 giant airborne refueling tankers.
The Air Force last week picked Boeing to build a replacement for the Eisenhower-era tanker fleet. The contract would mean tens of thousands of U.S. jobs, with Washington state and Kansas getting the bulk of the work.
In a statement, Boeing said "We are proud to have been selected to produce the most advanced, capable, and efficient next generation aerial refueling tanker for the Air Force at the best value for the taxpayers. We understand the importance of this effort to our customer and the country and stand ready, along with our nationwide team of suppliers, to go to work on the new KC-46A program."
EADS planned to assemble the aircraft at a closed military base in Mobile, Ala. The tankers allow jet fighters, supply planes and other aircraft to cover long distances.
“The decade of delay is over. I am relieved that our airmen and women and our Kansas workers can now look to the future with certainty," said Sen. Jerry Moran in a statement. " "Replacing the aging tanker fleet with the next-generation Boeing tanker is essential to the security of our country and safety of our troops, and is a much-needed economic boost to our state. Let’s get to work.”
Gov. Sam Brownback echoed Moran's sentiments. “I appreciate the decision by EADS to accept the clear outcome of the Air Force’s contract award. It was a very thorough, robust and open competition. Now we can focus on executing this program and delivering new tankers to our American war fighters."
Europe's EADS is poised to concede defeat in a decade-long battle with Boeing Co. by deciding not to appeal a $30 billion U.S. tanker contract, sources familiar with the matter said.
The parent of Airbus could announce as early as Friday that it will not protest last week's surprise decision by the Air Force to award Boeing a contract for 179 new refueling planes, said the sources, who were not authorized to speak publicly.
The move should avert the transatlantic tensions that flared after the Pentagon in 2009 revoked an earlier contract with EADS, but would likely dismay lawmakers in Alabama, where EADS had planned to assemble the flying gas stations.
It would hand a double victory to Boeing -- keeping its 767 production line running for a decade longer, and blocking Airbus from establishing a commercial airplane manufacturing site in the United States on the back of the tanker deal.
EADS shares, already depressed by Dubai's cancellation of a $4.76 billion Airbus jetliner order, closed down 2.6 percent at 19.78 euros in Paris, while Boeing shares rose 3.1 percent to $71.70 in afternoon New York Stock Exchange trading.
"Most likely there will be no appeal," said one source familiar with internal discussions at EADS.
Guy Hicks, spokesman for EADS North America, said the company was continuing to evaluate information provided by the Air Force this week and no final decision had been made.
Scott Hamilton of Leeham Co said the news was disappointing for EADS, but meant U.S. troops would finally get new refueling planes, which extend the range of military operations.
"That's the way things go in the world -- you win some and you lose some," he said.
Richard Aboulafia of the Teal Group said rising fuel prices had widened the gap in operating costs between the larger Airbus A330-based tanker and Boeing's more modest 767.
The expected peaceful conclusion contrasts with a bitter ongoing dispute between Europe and the United States over civil aircraft subsidies and would come just a year after French and German leaders warned of the threat of U.S. "protectionism."
The Pentagon awarded the contract to Boeing last week, calling it the "clear winner" in a contest that Alabama Senator Jeff Sessions described as a "low price shootout.
Air Force Chief of Staff General Norton Schwartz on Wednesday reiterated that EADS was entitled to protest the contract loss if it believed mistakes were made and said the company would not face "payback" for doing so.
He acknowledged the "ugly" history of the tanker procurement, but said Air Force officials were convinced they had handled the process fairly this time and would prevail in any legal challenge.
EADS has until March 7 to decide whether it will protest, but company officials are already shifting their focus to other U.S. weapons competitions and the hunt for acquisitions that could help it expand its footprint in the United States
Airbus Chief Executive Tom Enders last week looked beyond tankers to future business, telling Reuters: "We have given our competitor a tough fight and forced them to offer a very low price. For Boeing, losing this would have been a disaster; for us it is only a lost business opportunity.
EADS officials were briefed by Air Force officials about the tanker decision on Monday and again on Tuesday, and are still carefully examining all the information; but sources said the company was leaning against a legal challenge.
The Air Force was tight-lipped to EADS in its initial explanation of the contract award, prompting the company to request a second briefing; but the sources said officials have not found the kind of "egregious" error that EADS North America Chairman Ralph Crosby had said it would take to justify a protest.
A formal announcement by EADS, which is likely on Friday, would pave the way for Boeing to begin work on a $3.5 billion development contract signed with the Air Force last week.
Neither the Air Force nor Boeing had any comment.
A key Boeing union said its workers are ready to start building the new planes.
"It's time for the lawyers to stand down," said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace Local 2001.
EADS and Boeing are likely to battle it out again in coming years, when the Pentagon plans to stage separate competitions for another 300-plus refueling planes.
*Reuters and The Associated Press contributed to this report.