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Aircraft industry

Northrop Grumman Joins EADS in Bid to Sell Tankers to US Air Force

Strategic Insights

— 1 min read

US defence giant Northrop Grumman has ended months of speculation by announcing it will join Franco-German aerospace group EADS in a campaign to sell in-air refuelling tankers to the US air force, a contract that could be worth more than $20bn. The two companies have been in talks for months about joining forces in the bid, using Airbus's A330 to compete against an expected offer from arch-rival Boeing. Northrop officials believe the political climate is now open to a bid with the A330, despite the row between the US and European Union over subsidies to the two commercial aircraft makers.

Key Takeaways:

  • Northrop Grumman has joined EADS in a bid to sell in-air refuelling tankers to the US air force, with a contract worth potentially over $20bn.
  • The two companies will use Airbus's A330 to compete against Boeing's 767 in the bid.
  • Ronald Sugar, Northrop chief executive, delayed a final decision due to the row between the US and European Union over subsidies to the two commercial aircraft makers.
  • Scott Seymour, head of the Northrop division overseeing the tanker bid, stated: "We've heard both Congress and the air force stress the need for a competition, and we are prepared to address that need by forming a strong industry team."
  • The arrangement is similar to previous competitions in which foreign defence groups have teamed up with US contractors, such as AgustaWestland's partnership with Lockheed Martin.
  • EADS has been struggling to get its A330 offering taken seriously since the US tanker replacement programme ramped up three years ago.
  • Ralph Crosby, former Northrop executive and head of EADS' North American business, believes it would be "nearly impossible" for Airbus to win a competition against Boeing without a US partner.

Statistics:

  • Contract value: potentially over $20bn
  • Aircraft: Airbus's A330
  • Competitor: Boeing's 767
  • Subsidy row: between the US and European Union
  • Timeframe: three years since the US tanker replacement programme ramped up

Sources:

  • [1] "Northrop Grumman Joins EADS in Bid to Sell Tankers to US Air Force", Peter Spiegel, London.

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