UPDATE 2-Boeing says its tanker would save blns in fuel

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FARNBOROUGH, England July 16 (Reuters) - Boeing, renewing its drive for a key U.S. Air Force refueling-tanker contract, said a company-funded study found its candidate aircraft could save as much as $44 billion in fuel bills over 40 years compared with an identically sized fleet offered by rival Airbus.

“The larger, heavier (Airbus) A330 is less fuel-efficient than the (Boeing) 767-200ER and, as a result, consumes 24 percent more fuel per trip,” Boeing said in a statement released at the Farnborough International Airshow.

Calculating fuel costs over the life of the new U.S. tanker fleet is a key component of the contest, which was reopened by the U.S. Defense Department last week after a federal umpire found the Air Force had botched the selection process.

In February, the Air Force chose Northrop Grumman Corp NOC.N and Airbus parent EADS EAD.PA over Boeing BA.N to build 179 new tankers based on the bigger A330.

Chicago-based Boeing protested the choice on grounds the Air Force had not followed its own evaluation rules.

Last month, its protest was sustained in part by the U.S. Government Accountability Office, a congressional audit arm that recommended a rerun.

Among the issues upheld, the GAO said fuel costs needed re-evaluation. It said even a small amount of fuel burned per hour by one aircraft or the other would have a dramatic impact on fuel costs. Oil prices hit a record high last week above $147 per barrel, and many analysts expect prices to keep climbing.

EADS declined to comment on the report by Conklin & de Decker Aviation, described by Boeing as an independent aviation research company. Northrop officials said they would study the Boeing statement before deciding whether to comment.

Valued at $35 billion over 15 years, the deal could give EADS an important foothold in the U.S. market as a Pentagon supplier and a beachhead for manufacturing in the United States, aided by a cheaper dollar.

A new Boeing manager for the project, Dave Bowman, told reporters “life-cycle costs” were all the more important as the U.S. military deals with the budgetary strain of escalating fuel costs.

“This is even more evident today as our Air Force customer seeks the most affordable and capable solution,” he said.


The Northrop-led team was expected to challenge the conclusions cited by Boeing, which are based on operating a fleet of 179 Airbus A330-200 tankers compared with the same number of Boeings, even though fewer would be needed because each Airbus would be able to carry more fuel.

In the commercial arena, the A330 relegated the 767 to the sidelines of the market for long-distance twin-jets. It has had a second lease of life in the past two years as airlines wait for a new generation of jets being developed by both jetmakers.

Airbus argues this could not have happened if airlines, which monitor every penny spent on fuel, thought the Boeing 767 could offer the same fuel economy as the larger A330, which entered service more than a decade after its rival in 1993.

Boeing disagrees that the 767 is a lame duck and says the fuel costs estimated for passenger travel are in any case the wrong yardstick. It says its sums are based on calculations of trip costs including every aspect of complex tanker missions.

Boeing has a total backlog of 46 767s, but the last 767-200ER on its order books was delivered on March 31, leaving the backlog for the civil version of the tanker plane at zero.

Airbus has a backlog of 239 A330-200 planes, the variant put forward by Northrop as the basis of its tanker proposal.

“The A330 is more modern and has better range,” said aerospace analyst Richard Aboulafia of the Teal Group, asked why the A330 appeared to have conquered the 767 for passenger use.