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Northrop and EADS exit tanker bid Northrop and EADS exit tanker bid
(10 minutes later)
Northrop Grumman and its European partner EADS have pulled out of bidding for a $35bn (£23bn) US Air Force air-to-air refuelling tanker contract.Northrop Grumman and its European partner EADS have pulled out of bidding for a $35bn (£23bn) US Air Force air-to-air refuelling tanker contract.
The announcement most likely leaves the way clear for Boeing to win the deal.The announcement most likely leaves the way clear for Boeing to win the deal.
It came as EADS said it made a net loss of 763m euros ($1bn; £692m) last year, against a profit of 1.57bn euros in 2008, and said 2010 may be "volatile".It came as EADS said it made a net loss of 763m euros ($1bn; £692m) last year, against a profit of 1.57bn euros in 2008, and said 2010 may be "volatile".
In the three months to December, the Airbus parent company also said it had lost 1.05bn euros.In the three months to December, the Airbus parent company also said it had lost 1.05bn euros.
Shares in EADS were down 5% or 0.8 cents to 15.08 euros in early Tuesday trading in Paris. Shares in EADS were down 5%, or 0.8 cents, to 15.08 euros in early Tuesday trading in Paris.
'Weigh heavily''Weigh heavily'
The firm scrapped its dividend as it was hit by financial charges on its A380 superjumbo, adverse currency fluctuations, and cost overruns on its delayed A400M airlifter.The firm scrapped its dividend as it was hit by financial charges on its A380 superjumbo, adverse currency fluctuations, and cost overruns on its delayed A400M airlifter.
EADSLast updated: 09 Mar 2010, 09:43 UK *Chart shows local time pricechange%15.08-0.81-5.07 More data on this share price EADSLast updated: 09 Mar 2010, 09:53 UK *Chart shows local time pricechange%15.07-0.81-5.10 More data on this share price
"The A380 continued to weigh heavily on the underlying performance," EADS said in a statement, adding that it had also suffered from exceptional foreign exchange effects."The A380 continued to weigh heavily on the underlying performance," EADS said in a statement, adding that it had also suffered from exceptional foreign exchange effects.
Last year Airbus beat rival Boeing in aircraft production, delivering a record 498 aircraft.Last year Airbus beat rival Boeing in aircraft production, delivering a record 498 aircraft.
Airbus said it hoped to deliver the same number of aircraft this year as last year, and to secure 250 to 300 new gross orders.Airbus said it hoped to deliver the same number of aircraft this year as last year, and to secure 250 to 300 new gross orders.
But it warned that it saw the economy this year as "improving but still volatile".But it warned that it saw the economy this year as "improving but still volatile".
RegretRegret
Meanwhile, explaining its move for pulling out of the US tanker deal, Northrop Grumman said the US Air Force's contract proposal "favours" Boeing.Meanwhile, explaining its move for pulling out of the US tanker deal, Northrop Grumman said the US Air Force's contract proposal "favours" Boeing.
The Air Force had a chance to deliver the most capable tanker possible to our war fighters and blew it Alabama Senator Richard Shelby
Northrop Grumman and EADS had won a contract for the deal in February 2008, but this was then cancelled following a Boeing appeal.Northrop Grumman and EADS had won a contract for the deal in February 2008, but this was then cancelled following a Boeing appeal.
At the time, there was substantial political opposition in Washington to the involvement of EADS, which owns Airbus, the big European rival of US-based Boeing.At the time, there was substantial political opposition in Washington to the involvement of EADS, which owns Airbus, the big European rival of US-based Boeing.
Meanwhile, Boeing had been awarded the contract in 2003, only for it to be cancelled after an ethics scandal that saw a US Air Force official convicted of criminal conspiracy.Meanwhile, Boeing had been awarded the contract in 2003, only for it to be cancelled after an ethics scandal that saw a US Air Force official convicted of criminal conspiracy.
The Pentagon said it regretted Northrop's decision.The Pentagon said it regretted Northrop's decision.
The US Air Force is seeking to replace its ageing fleet of 1950s-built air tankers. The US Air Force is seeking to replace its ageing fleet of 1950s-built KC-135 air tankers.
No complaint
Northrop and EADS planned to build a tanker plane based on the large capacity Airbus A330 aircraft, while Boeing is proposing to use its smaller 767 aircraft.
Northrop said the US Defence Department's latest air tanker proposal requirement was unfairly geared towards a smaller aircraft such as the 767.
Wes Bush, Northrop's chief executive said the request "clearly favours Boeing's smaller refuelling tanker and does not provide adequate value recognition of the added capability of a larger tanker, precluding us from any competitive opportunity".
Northrop said that while it had "substantial grounds" to make a complaint, it would not, as it did not wish to further delay the tanker replacement programme.
'No slam dunk'
It and EADS had planned to assemble the tanker planes in Alabama, where 300 new jobs would have been created.
Alabama Senator Richard Shelby said the competition had been wrongly "structured to produce the best outcome [for Boeing]".
"The air force had a chance to deliver the most capable tanker possible to our war fighters and blew it," he added.
However, Senator Patty Murray from Washington state, where Boeing has its main assembly base said "today's news is by no means the end of the line, and this contract is no slam dunk [for Boeing]".
Analysts said EADS could theoretically now launch a solo bid, but that this was unlikely to be forthcoming given the antagonism in Washington to the European firm winning the contract.