Australia happy with EADS' work on refueling tanker

By Andrea Shalal-Esa

WASHINGTON, Jan 24 (Reuters) - Australia is "very happy" with work by Europe's EADS (EAD.PA) on its new Airbus A330 refueling tankers, and has shared its insights with the U.S. Air Force, which is due to pick a winner soon in its own tanker program, a top Australian military official said on Thursday.

Australia picked EADS and its A330 Multi-Role Tanker Transport (MRTT) over Boeing Co's (BA.N) 767 tanker in 2004.

Boeing is competing with Northrop Grumman Corp (NOC.N), which has teamed with EADS, for a $40 billion contract for 179 refueling tankers that the U.S. Air Force is expected to award sometime after a key Pentagon meeting on Feb. 13.

"We're very happy with it. All the testing is going well," said Mark Reynolds, counselor for defense materiel at the Australian embassy in Washington, when asked about progress on his country's tanker program.

He said Australia would welcome a decision by the Air Force to choose the Airbus tanker, since that would lead to much lower maintenance and (operating) costs for their A330s in the longer term. "It would be great for us," Reynolds said, after remarks to a defense industry group.

But he said U.S. officials had assured him that regardless of how the decision comes out, the two country's refueling aircraft would be able to operate together.

Reynolds said Australian officials had briefed U.S. officials "extensively" about their experiences with the EADS tanker program as part of the U.S. Air Force's evaluation of competing bids in its own program.

EADS will deliver the first of five Australian tankers in early 2009, said Guy Hicks, spokesman for EADS North America.

That date is a few months later than expected due to changes in the tanker, requested by Australia, a source familiar with the program said.

EADS has also won A330 tanker orders from the United Arab Emirates, Britain and Saudi Arabia.

Boeing is building its 767 tanker for Italy and Japan. Those deliveries are running late, but Boeing has said it has learned important lessons that would help it keep any U.S. Air Force orders on track.

Air Force officials say they will award the tanker contract as soon as possible, but they have been reluctant in recent weeks to set a specific timetable.

Defense analyst Loren Thompson of the Lexington Institute, said Air Force officials expect to pick a winning bidder in the first week of February, although an announcement is unlikely until after a Feb. 13 Defense Acquisition Board meeting. (Editing by Tim Dobbyn)