UPDATE 3-Northrop-EADS said to best Boeing for tanker
(Recasts, updates throughout)
By Jim Wolf
WASHINGTON, Feb 29 (Reuters) - The U.S. Air Force has picked a Northrop Grumman-led transatlantic team over rival Boeing Co (BA.N) to start building a new aerial refueling fleet in a major upset, a prominent defense analyst said on Friday.
The plane offered by Northrop Grumman Corp (NOC.N) and its European partner, Airbus parent EADS (EAD.PA), outperformed Chicago-based Boeing's aircraft in four of five areas, and matched it in the fifth, said Loren Thompson of the Lexington Institute. He cited officials involved in the contract award.
The winner-take-all deal is to supply 179 tanker aircraft, valued at $30 billion to $40 billion over the next 15 years. The aircraft will phase out Eisenhower-era KC-135 tankers built by Boeing.
Northrop shares initially shot up more than $5 in after-hours trading on the New York Stock Exchange to $83.75 per share while Boeing slumped by nearly $3 to $80 per share.
The program marks the first stage of a multi-decade plan to replace more than 500 KC-135 tankers used to extend the range of fighter jets and other warplanes.
With follow-on orders and in-service maintenance, it could be the second costliest military purchase over decades, topped only by Lockheed Martin Corp's (LMT.N) F-35 Joint Strike Fighter.
Future phases of the purchase could bring the cost of the entire fleet to more than $100 billion, although the winner of this competition is not assured of winning future ones, Air Force officials have said.
Boeing's KC-767 had been widely predicted to win the initial contract, partly because it had a greater amount of U.S. domestic production compared with the Northrop-EADS candidate, based on the Airbus A330 commercial airliner.
The winner of the competition was to be officially announced by Air Force Secretary Michael Wynne at 5 p.m. (2200 GMT).
The Air Force calls the new tanker fleet its top acquisition priority.
In 2004, the U.S. Congress killed an earlier $23.5 billion Air Force plan to lease and then buy 100 modified Boeing 767 tankers amid a Pentagon procurement scandal brought to light chiefly by Sen. John McCain of Arizona, the all-but certain Republican nominee for U.S. president. (Reporting by Jim Wolf, editing by Tim Dobbyn)
