Transcripts

The U.S.A.F. Contract Air Wars

PAUL KANGAS: Europe's Airbus and Northrop Grumman today upped the political ante in their efforts to land a multi-billion dollar U.S. Air Force contract, saying a win would mean thousands of new jobs for U.S. workers. As Stephanie Dhue reports, the firms are battling Boeing for the contract to build huge aircraft refueling planes known as tankers.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Airbus and its partner, Northrop Grumman, dangled the prospect of creating new jobs in Alabama if it wins the $40 billion Air Force contract. Airbus CEO Thomas Enders says possibly moving manufacturing to Alabama flies with his company's expansion plans.

THOMAS ENDERS, PRESIDENT & CEO, AIRBUS: To bring commercial aircraft production, final assembly into the United States, to put that into a place where we hopefully will produce the KC-30 with our partner Northrop Grumman is an important decision. It's an important market. It's only the second final assembly, commercial final assembly that we've let outside Europe.

DHUE: The proposal raises the political stakes in an already bitter battle for the contract. Boeing today shot back that the quote 11th hour Airbus move, simply highlights the inherent inefficiencies of their production relative approach relative to ours, end quote.

In 2003, the Air Force selected Boeing for a tanker leasing contract, but the Pentagon canceled the award after a senior Air Force official was convicted of violating conflict of interest rules for steering contracts to Boeing. Many analysts say U.S-based Boeing still has a built in political advantage, making it the odds on favorite to win the contract. But defense consultant Brett Lambert says this time the political calculation isn't as clear.

BRETT LAMBERT, DEFENSE CONSULTANT, DENSMORE GROUP: The Air Force is being very careful with this procurement, given its history of past performance. They are judging this tanker deal solely on the attributes of the tanker itself.

DHUE: The weak dollar is also a driver behind moving jobs from Europe to the U.S., but Airbus says those jobs will only move with a contract.

ENDERS: Never say never, but at this time, at this juncture, we obviously base our decision to bring a commercial aircraft for finally assembly into the U.S. on the opportunity that the tanker contract or a tanker contract would present.

DHUE: The Air Force is expected to announce the winner in the next few weeks, after already delaying the decision for months. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.