April 9, 2010 / 9:29 AM / 10 years ago

UPDATE 2-EADS close to decision on U.S. tanker bid

* Airbus parent weighs US supplier offers, L-3 seen ahead

* Executives met Friday to discuss possible tanker bid

* Sources say decision may be taken early next week (Adds decision may come early next week, background)

PARIS, April 9 (Reuters) - Airbus parent EADS EAD.PA is close to a decision on bidding for a deal worth up to $50 billion to supply aerial tankers to the United States backed by a U.S. supplier, sources close to the matter said on Friday.

Executives of the European company met on Friday to weigh offers from three defence firms which are ready to install sensitive U.S. electronics on Airbus planes if it decides to challenge Boeing (BA.N) for the long-delayed contract.

L3-Communications LLL.N is seen as the front-runner to be chosen as a key supplier if, as sources on both sides of the Atlantic expect, EADS decides to bid with jets based on the Airbus A330 against a redesigned Boeing 767. [ID:nN06247037]

Sources however said EADS had still not excluded alternative offers from Raytheon (RTN.N) and — though considered the least likely — the U.S. unit of Britain’s BAE Systems (BAES.L).

Discussions between EADS North America and the three companies were disclosed by Reuters earlier this week.

An EADS spokesman declined to confirm Friday’s talks, but said, “Everyone is working hard to put together all the necessary facts to take a decision as soon as possible.”

Sources familiar with the matter, asking not to be identified, said a decision may be taken early next week.

The European company has been given extra time to decide whether to stay in the race after its former partner Northrop Grumman (NOC.N) pulled out on the grounds that the rules for the contest favoured Boeing (BA.N), a charge denied by Washington.

EADS was junior partner to Northrop when the transatlantic team won a previous contest to supply the planes in 2008, but the deal was overturned on a protest from Boeing.

This time EADS has been invited to bid through its North American subsidiary as the senior partner or prime contractor, handing it an opportunity to raise its profile in the lucrative U.S. defence market while bringing in a local partner.

EADS executives are debating whether to grab that opportunity, as the company seeks to expand globally, or conserve resources for a number of cash-hungry projects in Europe.

Boeing and its supporters in Congress have complained that EADS was given an extra 60 days until July to enter a bid, saying this adds an unjustified wait to years of delay in replacing the U.S. Air Force’s aging fleet of refueling planes.

The U.S. firm said last week it was reviewing all options.

Sources on both sides of the Atlantic have said EADS is leaning toward bidding despite internal reservations about embarking on a major new campaign shortly after a recent funding crisis on its European A400M military airlifter. [ID:nN26145632]

A bid would spark a heated contest with Boeing that could result in a decision due to be taken just ahead of Congressional elections in November, ensuring a politically charged race.

Airbus Military meanwhile said its second A400M test plane had successfully carried out a maiden flight on Thursday. (Reporting by Matthias Blamont and Tim Hepher; Editing by Simon Jessop and Tim Dobbyn)

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