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EADS submits tanker bid to Air Force

EADS North America has begun shifting its entire KC-X team to Mobile, Ala., a move designed to coincide with the company’s bid on the $35 billion tanker contest, EADS executives said Thursday.

“We’re treating this as if, come the announcement of the contract award date of Nov. 12, we’re gonna win,” said EADS North America CEO Sean O’Keefe during a briefing with reporters to discuss EADS’ 8,000-plus-page KC-X bid at the company’s North American headquarters in Arlington, Va.

The team will begin moving to Mobile on July 12 to lay the groundwork for what will eventually become the manufacturing facility for EADS’ 179 A330-based tankers, as well as all of its future A330-200 commercial freighters, if it wins the contest.

EADS officials plan to have roughly 200 workers in Mobile by the time the contract is awarded in mid-November, according to company spokesman Guy Hicks.

The European defense giant plans to start work on tankers in Alabama when the fourth test airplane in the program is delivered to Mobile, where the jet will receive military modifications. The company will gradually ramp up to producing airplanes and performing final modifications at the Mobile plant, according to former EADS North America CEO Ralph Crosby, who is now chairman of the company’s board. He could not give a hard date for when that airplane will be sent to Alabama.

The contest is seen by the European company as a crucial foothold into the massive U.S. defense market. Securing a slot as a prime contractor to build 179 large aircraft positions the company well to win follow-up contracts to replace the remaining Air Force tanker fleet in the coming decades, Crosby said.

Crosby and O’Keefe went on to slam rival Boeing’s efforts to turn focus on the tanker debate toward a recent World Trade Organization ruling citing EADS for using unfair government subsidies to develop its aircraft. These subsidies have allowed EADS to consistently undercut Boeing in the civil jetliner market, causing Boeing to lose double digit market share around the globe, according to the ruling.

Crosby accused Boeing and its allies on Capitol Hill of throwing “extraneous issues” regarding EADS into the legislative process. Crosby was referring to efforts by pro-Boeing lawmakers to force the Pentagon to factor the cost of $5 billion of the subsidies into the price of EADS’ A330-based bid.

The former chief executive went on to say that he seriously doubts the legislation will pass before the Nov. 12 KC-X award date.

He would not address how the subsidies play into EADS’ ability to offer its A330-based offering at an aggressive price compared to Boeing’s design, which is based on an updated version of the older, smaller 767 jetliner.

“We feel very good about the offer that we’ve put together. ... There are substantial issues on price but there are also features that modify the price” in EADS’ favor in the Pentagon’s evaluation of the two jets’ price tags versus performance. However, Crosby did not elaborate on the specific cost of the EADS jet other than to say, “I feel good about the intersection of value and price.”

EADS officials sent the company’s massive KC-X proposal to Wright Patterson Air Force Base, Ohio, via truck and a privately chartered Piaggio Avanti plane from Dulles International Airport in Virginia on Thursday morning, one day ahead of the deadline to submit bids on the contest.

The proposal meets all of the Air Force’s 372 mandatory performance requirements for the tanker, according to Crosby and O’Keefe. The executives repeated the EADS line that their proposal is “in most cases identical” to theA330-based tankers being flight tested for the Royal Australian Air Force.

O’Keefe also repeated the insinuation that Boeing’s proposal comes loaded with more developmental risk since its KC-X offering, the NewGen Tanker, is only on the drawing boards while the EADS jet “is not an artist’s rendering, it’s an aircraft that flies today.”

Boeing officials have until Friday to submit their official bid into the competition.