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Boeing ALMOST Picks 777 Tanker

After more than a year of speculation, Boeing appeared to drop a small bombshell at the Paris Air Show this morning, namely that the company will drop its 767 tanker and instead bid for the US tanker contract using a 777.

Bloomberg broke the story after speaking with IDS chief Jim Albaugh while Northrop Grumman was briefing reporters about its tanker efforts. Turns out that Bloomberg wasn't quite right, according to Boeing officials. The company will offer the 777 should the RFP and the new requirements warrant, a spokesman said. The company is ready to offer the 777 should it need to. But the company certainly hasn't dropped the 767 or decided that the 777 is the right plane for the competition.

"The announcement today was that Boeing was positioned to offer a 777 tanker IF the Air Force customer requires a tanker where they set the premium at fuel offload indicating a need for a larger tanker," Boeing spokesman Damien Mills said in an email. "If it's multi-role capability we still have the 767 to offer. Again, it's all dependent on the requirements set forth in the draft RFP."

Since Boeing has been considering the 777 at least since the contract with Northrop Grumman was cancelled, it's not exactly news that the 777 is possibly in the cards. What does seem clear is that the company has done a great more analysis and bid preparation so it can offer either the 767 or the 777 should the occasion warrant.

Still, a Boeing 777 bid raises all sorts of questions. Given the problems Boeing has had reducing the vibrations afflicting its refueling pods on the 767, and the enormous technical and engineering challenges of refitting the 777, can the company get a plane in shape in time to fill the Air Force's first tranche of 179 planes?

As one observer here put it, the 777 is "totally untested and unproven" as a tanker, although it has en enviable safety and efficiency record.

But it may be that Boeing is largely conceding the first tranche of planes to Northrop and aiming for the larger follow-on buy.

Meanwhile, Northrop and its European partner, EADS, have staked out much stronger public positions than they did at the Farnborough show last year.

EADS officials on Saturday said they were assuming a tanker win as part of their revenue projections. And Northrop officials, speaking less than an hour ago, noted that their tanker bid was "superior in all aspects," as Paul Meyer, VP and general manager for advanced programs said. "We believe we will be victorious in the future," Meyers said, a sentiment that could not have been squeezed out of Northrop officials on the rack at Farnborough....

But there are rumors that Northrop is weighing its commitment to the tanker program, which has cost the company financially and politically. Two sources have told me that Ron Sugar, the company's CEO, will walk away from the competition should the new RFP appear weighted too heavily in Boeing's favor. This could, of course, be part of the company's gaming efforts to ensure that the Air Force does include analysis such as best value as it makes its choice.

Meyers made clear, as does his colleague Janis Pamiljans in the video below, that the Air Force must include "best value" as a key component of the service's tanker analysis. If best value is not included, given the rumors about Sugar, it seems very possible that Northrop will pull out of the tanker competition. Air Force officials must be really enjoying all this.

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