Wharton Aerospace & Defense Report

Analyst: Boeing Slipping Behind Airbus in Tanker BidDecember 08, 2010

Boeing executives believe they are losing ground to EADS's Airbus in the controversial $40 billion competition to replace the U.S. Air Force's ageing aerial refueling tankers.

That's the conclusion reached by The Seattle Times after  interviewing an analyst with close ties to Boeing and to two congressional sources familiar with the competition. The analyst, Loren Thompson of the Lexington Institute, a think tank based in Arlington, Va., said the Boeing executives based their outlook on the data that the Defense Department accidently shared with both Boeing and EADS.

The data showed that the Air Force's analyses of the rival bids gave higher marks to Airbus's A330 tanker over Boeing's 767 tanker in a mission-effectiveness test, according to Thompson, the article noted.

The mission-effectiveness test is one of three criteria used by the Air Force to set the price for the bid. This criterion uses a computer model called Integrated Fleet Aerial Refueling Assessment, or IFARA, to measure each plane's tanker capabilities, including such benchmarks as how much fuel can it deliver and how far can it travel. Analysts and industry experts already knew that Airbus's A330 had an advantage over Boeing 767 by this criterion, according to the Times.

Boeing, however, was pegging its hopes on two different assessments. These two measure the military's infrastructure construction costs and fuel usage over the course of the airplanes' lifecycle.

Thompson noted that while the infrastructure and fuel usage costs give an edge to Boeing's smaller tanker design, the way the Air Force measured even those criteria negated Boeing's advantage.

A congressional source told the Times that Boeing thinks the Air Force is underestimating the projected cost of jet fuel in the future and therefore is projecting lower lifecycle fuel costs. In addition, Boeing has concluded that the Air Force has selected ten airfields for infrastructure analysis that not do represent typical situations.

"Boeing has told me many times over the last year that the way the Air Force was calculating the cost of fuel and infrastructure had the effect of minimizing the lifecycle costs of the larger [Airbus] plane," said Thompson. "The conclusion you come to is that probably Boeing is going to lose this."