And EADS seems to be in again - without Northrop-Grumman though...!

REFILE-UPDATE 2-Boeing cites Iran in tanker battle with EADS

  WASHINGTON, May 25 (Reuters) - Boeing Co (BA.N) accused rival EADS (EAD.PA) of having courted Iran and other countries at odds with the United States and said this should be taken into account in awarding a potential $50 billion U.S. Air Force refueling plane contract.

EADS, headquartered in Paris and Munich, "continues to do business with countries that are not friendly to the United States," Timothy Keating, Boeing's vice president of government operations, told a small group of reporters.

U.S. national security could be undercut by relying on EADS, a company over which the United States lacks as much "leverage" as it does over Boeing from which it buys much more, he added.

The Defense Department rose to the defense of EADS, saying it did not want to get involved in the "political sparring that is clearly taking place here" and would confine its response to a "statement of fact."

"We would not have welcomed EADS North America's participation in this important competition unless they were a company in good standing with the Department of Defense," Geoff Morrell, the Pentagon press secretary, said by email.

Boeing and the corporate parent of Boeing's commercial archrival, Airbus, are locked in an increasingly bitter race to sell the Air Force an initial 179 tankers used to refuel other planes in mid-air.

Keating cited a marketing effort by EADS subsidiary Eurocopter at an Iranian air show at a time the United States was pushing European allies to get tougher on Iran over its nuclear program. The event took place in 2005, said Boeing officials, who supplied a link to an NBC television report at the time.

"We have not seen any indication that EADS no longer has an interest in marketing their military products to countries like Iran," a U.S. foe, Daniel Beck, a Boeing spokesman, said in a follow-up telephone interview.

A laminated card newly distributed by Boeing on Capitol Hill described EADS and its Airbus subsidiary as "foreign government owned." It added that they were free from such laws as the U.S. Foreign Corrupt Practices Act, which outlaws bribes and improper payments to win contracts overseas.

The card's flip side said the United States, "for reasons of national security," had never bought a critical military system "developed or produced by a foreign owned or controlled company -- including aerial refueling tanker aircraft."

France, Germany and to a lesser extent Spain have considerable sway over EADS, which was formed in 2000 through a merger of aerospace assets, but they have no say in day-to-day decisions or strategy.

The French government owns 15 percent, but its hands are tied by a shareholder pact giving control over nearly all issues to the industrial founders: French media group Lagardere (LAGA.PA) and German car company Daimler AG (DAIGn.DE). The pact was designed to allay German concerns about any French state interference.

EADS North America was chosen in 2006 to supply a new light utility helicopter for the U.S. Army, with a potential total "life-cycle" value of more than $2 billion.

A spokesman for EADS North American arm, James Darcy, said Boeing was trying to make the tanker competition "about anything other than getting the best tanker for the Air Force."

Boeing officials said the national-security implications of any EADS tanker contract were more serious now that Northrop Grumman Corp (NOC.N), EADS's partner in a previous tanker competition, had dropped out.

Northrop withdrew in March, complaining the contest was unfairly slanted to favor Boeing's smaller 767 wide-body derivative over its tanker based on a modified Airbus A330.

The Northrop-EADS partnership won the deal in 2008 only to have the award withdrawn after the Government Accountability Office ruled in favor of a Boeing protest that the Air Force had failed to follow its own bid-evaluating rules.

Boeing now says it fears EADS plans to low-ball its bid in an attempt to boost its toehold in the lucrative U.S. market. It is pushing a bill in Congress that would force the Pentagon to adjust EADS' bid by the value of illegal European subsidies as determined by a final World Trade Organization panel ruling in March.

"Only with a heavily and illegally subsidized price could their much bigger airplane cost less than than Boeing's 767 tanker," Keating told reporters. "We simply believe that the unfair advantage of those subsidies needs to be considered."

A European counter claim that Boeing has benefited from improper U.S. federal, state and local subsidies is due for an interim ruling by the WTO by the end of next month. A final ruling may not come in time to be factored in under the legislation introduced by lawmakers from Kansas, where Boeing's tanker would undergo final assembly and militarization.

Keating said the U.S. government would lack leverage to make sure of an uninterrupted flow of spare parts, for instance, for any Airbus tanker in case of a policy difference with France and Germany, which opposed the U.S.-led invasion of Iraq in 2003.

"What leverage does the United States have over EADS North America" the unit that would be the prime contractor, he asked.

"A lot less than they would have over the Boeing Company" which does a lot more business with Washington, he responded.

In an NBC television report that aired on Feb. 23, 2005, an EADS representative, Michel Tripier, said his company was emphasizing its civil helicopters at the air show on the Iranian island of Kish.

"As a European company, we're not supposed to take into account embargoes from the U.S.," he said on camera at the time.

EADS' Darcy said Tripier had not been authorized to make that statement "and his comments were both incorrect and inappropriate.

"He was removed from his position and ultimately left the company," Darcy added.

The only arms sales to Iran banned under three U.N. Security Council resolutions passed since December 2006 were those that might contribute to Tehran developing nuclear weapons. However, sanctions now under consideration by the council would bar sale of many categories of heavy weapons to Iran. (Reporting by Jim Wolf; additional reporting by Tim Hepher in Paris and Patrick Worsnip at the United Nations; editing by Tim Dobbyn and Andre Grenon)

http://www.reuters.com/article/idUSN2515326220100525

Boeing being naive... The whole Iranian AF uses Boeing tankers... they even got two experimental 747s left over from the KC-10 program.

And most airbus planes have US made engines, so where is the problem

* 2 congressmen threaten to cut off tanker appropriations

* Pentagon faulted for sticking "head in sand"

* Pentagon says has nothing new to say on matter

By Jim Wolf

WASHINGTON, June 30 (Reuters) - The Pentagon must take into account subsidies that went to Airbus in judging a rematch with Boeing Co (BA.N) for a fat contract to build a new fleet of U.S. Air Force refueling planes, a bipartisan group of lawmakers said.

At least two congressmen, reacting to a World Trade Organization ruling in a long-running subsidy dispute, spoke Wednesday of cutting off funding for the potential $50 billion tanker order if it went to EADS (EAD.PA), Airbus's corporate parent, without factoring in the WTO's findings.

Bids are due July 9 in the Air Force's third try in a decade to replace 179 of its KC-135 tankers, which average about 50 years old.

About a dozen members of the House and Senate, speaking to reporters in an outdoor press conference on the Capitol grounds, voiced concern the Pentagon would ignore the WTO.

"The Defense Department cannot look forward to appropriations for this tanker unless it takes into consideration in the bidding process these illegal subsidies," said Rep. Jay Inslee of Washington state, where Boeing manufactures the 767 widebody it would use for its tanker.

Rep. Todd Tiahrt of Kansas, where Boeing's tankers would undergo final assembly, said such action might take place after the tanker award, which is expected by Nov. 12.

A WTO panel found Airbus had only been able to launch a series of passenger jets -- including the A330 it would modify to become a U.S. tanker -- thanks to banned subsidies from the EU and member states Britain, France, Germany and Spain.

Boeing's political allies contend the Defense Department in evaluating EADS' tanker bid should raise the total consistent with the $5 billion in subsidies found to have gone to develop the A330.

The House of Representatives voted 410 to 8 on May 27 to force the Pentagon to consider illegal subsidies in the contest. It did so in an amendment to a fiscal 2011 defense spending bill. The Senate has not yet acted on the matter.

"The Pentagon can no longer stick its head in the sand over this flagrant violation of rules by Airbus and EU," said Sen. Kit Bond of Missouri, where Boeing's military aircraft arm is headquartered.

Sen. Sam Brownback of Kansas, where the proposed Boeing tanker also would be militarized, told Reuters he would move as soon as possible in the Senate to match the House vote requiring the Pentagon to factor in subsidies.

Geoff Morrell, the Pentagon's press secretary, said by email that he had nothing to add to the Pentagon's oft-stated position on the matter. In the past he has said the Pentagon cannot take punitive action against EADS outside the WTO process, which provides for appeals.

"This is a situation where both sides have claims and counterclaims against each other," he said on March 25.

"We expect the WTO findings will be appealed and the resolution of this matter will take years."

Senator Richard Shelby of Alabama, where EADS would build its version of the tanker, said in a statement: "The tanker competition must move forward as it is currently structured. It would be a significant mistake, with severe consequences to both our economy and trade relations, to attempt to restrict the tanker competition based on this WTO report."

A first confidential report in a countersuit brought by the European Union against U.S. support for Boeing is expected on July 16.

Guy Hicks, a spokesman for EADS' North American arm, said the only beneficiary of the punitive actions being sought by Boeing's allies in Congress would be Boeing.

U.S. forces would lose the right to choose the best tanker, taxpayers would lose the benefits of competition and the 48,000 Americans that EADS says would be employed for its tanker "would be robbed of the opportunity to work in support of U.S. national security," he said in an email.

In 2004, a plan to lease and then buy Boeing 767s, modified as tankers, collapsed in a scandal that sent Boeing's chief financial officer and the Air Force's former No. 2 arms buyer to prison for conflict-of-interest violations. EADS, then partnered with Northrop Grumman Corp (NOC.N), won a 179-plane contract in February 2008.

That deal was canceled after Boeing successfully protested the award, setting the stage for the current competition. In siding with Boeing last time, the Government Accountability Office said the Air Force had made several errors that could have changed the outcome, including failing to properly follow its own judging criteria. (Reporting by Jim Wolf; Editing by Gary Hill)

http://www.reuters.com/article/idUSN3025060320100630

Leaked embassy cables show that US diplomats aggressively pushed foreign governments to purchase Boeing airplanes, helping the US aviation giant in the bitter transatlantic battle with its European rival, Airbus.

By Joseph BAMAT

In late 2007, the national airline of the Kingdom of Bahrain announced a huge deal to buy airplanes from European aviation giant Airbus. But only a few weeks later, Gulf Air’s decision was suddenly reversed and a new contract signing ceremony with US aerospace rival Boeing was scheduled to coincide with then US President George W. Bush’s trip to Bahrain – the first ever visit of a sitting US president.

Airbus had been sidelined by backdoor dealings at the highest levels, and not even an eleventh-hour appeal by French President Nicolas Sarkozy could undo the damage. It was just one of many incidents of US diplomatic wrangling that led foreign governments to favour Boeing over Airbus.

Hundreds of newly leaked cables, obtained by the US daily the New York Times, show that US diplomats have aggressively lobbied foreign governments to buy commercial jetliners built by the Seattle-based airplane manufacturer.

“United States diplomats were acting like marketing agents, offering deals to heads of state and airline executives whose decisions could be influenced by price, performance and, as with all finicky customers with plenty to spend, perks,” the daily wrote.

The cables describe how US diplomatic staff approached, wooed and sometimes cajoled foreign officials who were still considering whether to buy airplanes from Boeing or Airbus. The bargaining chips included not only presidential visits, but negotiations over landing rights at New York’s John F. Kennedy Airport and private jet upgrades.

The leaked embassy cables shed new light on what is recognised as one of the most bitter and ongoing transatlantic commercial feuds, despite a decades-old trade agreement between US and European leaders to keep politics out of airline deals.

But with billions of dollars and tens of thousands of jobs at stake US and European diplomats felt compelled to intervene, especially during an economic crisis.

While it is common knowledge that diplomats intervene to promote their country’s businesses, the newly leaked cables reveal the extensive backroom negotiations propelling major multinational aviation contracts.

In the case of the Gulf Air contract, it was the former US ambassador, Adam Ereli, who appealed directly to the kingdom’s crown prince to overturn the deal reached between the airline company and Airbus, even though the Airbus deal was 400 million dollars less than Boeing’s offer, the cables revealed.

“Seeing that Airbus had been outmanoeuvred, France’s president, Nicolas Sarkozy, made a last minute bid to save the deal… He offered to visit Bahrain after Bush had left, but that stop-over was cancelled when the Boeing agreement was signed in January 2008,” the New York Times reported.

In 2006, a senior Commerce Department official hand-delivered a personal letter from former President Bush to the Jeddah office of the Saudi King, urging him to buy 43 Boeing jets. According to the cables, the king replied in turn with a personal request: “all the technology that his friend, President Bush, had on Air Force One,” for his own private jet.

According to the New York Times, the cables also suggest demands for bribes “still take place”. But the embassy documents also revealed that Boeing and US officials turned away some requests to hire intermediaries who charge illegal commissions.

Boeing and Airbus each control about half of the global market for commercial jetliners, but Boeing eclipsed Airbus in net orders in 2010, securing 484 orders against 388, according to November data.

The revelations of Washington’s sales pitches for Boeing comes before a much-anticipated contract decision by the US Air Force slated for early in 2011; one which involves rival bids from Boeing and Europe's EADS –the European aviation and defence group that includes Airbus.

The Pentagon’s plan to buy 179 tankers to renew its fleet of Eisenhower-era refuelling aircraft is worth up to 38 billion euros ($50 billion).

The current contest marks the Pentagon’s third try to buy new tankers, which has been dragged out by complaints by both parties of faulty and unfair bidding practices, and claims of illegal subsidies to the aviation giants.

In July 2010, the World Trade Organization partly backed a US complaint that some state support for aerospace giant Airbus is illegal.

The US had complained that Airbus had received “illegal help” from the EU totalling 139 billion euros since 1967. The EU hit back saying that Boeing’s financial assistance from the US government was nearer to 300 billion euros over the same period and has launched an appeal.

http://www.france24.com/en/20110103-boeing-airbus-war-usa-france-wikileaks-cable...

As the Air Force nears a tanker decision, Boeing and EADS are getting sensitive about who's got access to the Oval Office. Boeing's supporters fear today's arrival of French president Nicolas Sarkozy – last time he came to town, he pressed President Obama for a "free and fair" competition, and Obama told him he could "trust" that would be the case. Boeing backers are wondering just what Sarkozy will say this time around.

Likewise, EADS may be ruffled by Obama's pick for chief of staff – Boeing board member Bill Daley. An industry official noted it was Daley's brother who helped bring Boeing to Chicago and said that the choice runs counter to Obama's previous position of choosing people who come in without a question mark.

"In a shrinking defense budget environment, where the competition for every dollar is going to be more and more intense, even just the appearance of someone in a senior position with a disposition to one company or another is disconcerting," the official said. "Now there's a champion for Boeing in the office next to the president. That's going to make you nervous.”

http://www.politico.com/politico44/perm/0111/tanker_tea_leaves_853eddb3-e49d-458...

OVERLORD_CHRIS wrote on Jan 18^th, 2011 at 8:00pm:


Daley? Chicago? Oh dear.