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EADS sees no financial hit from U.S. tanker loss
March 11, 2010 / 8:09 AM / 8 years ago

EADS sees no financial hit from U.S. tanker loss

PARIS (Reuters) - The apparent loss this week of a U.S. in-flight refueling tanker contract worth up to $50 billion will not affect EADS’s EAD.PA finances, the European aerospace group’s chief executive said on Thursday.

On Monday EADS’s U.S. partner Northrop Grumman (NOC.N) dropped out of the competition to supply the U.S. military with in-flight refueling tanker aircraft, leaving U.S. rival Boeing (BA.N) as the sole bidder.

“We can’t say this would have an immediate financial impact for us. It is roughly 15 planes a year and we produce 500 annually, so this is not something that will disrupt the balance at EADS,” Louis Gallois told French radio RTL in an interview.

“But the deal would have seen us set up an assembly line in the United States and become a U.S. plane maker. This won’t be possible now,” Gallois added.

Northrop and EADS had won the competition in February 2008 but the Pentagon canceled the deal after government auditors upheld a Boeing protest.

With Northrop’s decision to pull out of the race, the tanker deal is within Boeing’s reach nearly nine years after the U.S. Air Force first mapped out a sole-source deal with Boeing that was later killed by Congress after a huge procurement scandal.

“The consequence of this is that the U.S. taxpayer will probably pay more because there is no competition and the U.S. Air Force will have less efficient, less modern material,” Gallois said.

Gallois ruled out the possibility of EADS coming back into the race with a solo bid before the bidding deadline on May 10.

“If we wanted to stay we would need to find another U.S. partner because we need one ... Can you imagine finding a new partner and putting a bid together in 60 days,” he said, adding though that the United States may decide to extend the bidding deadline following a protest from the French government.

French Prime Minister Francois Fillon has accused Washington of breaching international trade rules.

President Nicolas Sarkozy is also due to discuss the situation with Barack Obama during a trip to Washington at the end of the month.

Reporting by Marie Maitre; Editing by Greg Mahlich

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