Manufacturing

Boeing Wins $35 Billion Tanker Deal

By Seattle Business Magazine February 24, 2011

In a decision that caught many by surprise, the Air Force announced today that it awarded a $35 billion contract for aerial fueling tankers to Boeing. Early betting had been that European rival Airbus had the advantage in the competition. In addition to offering a larger, what some analysts believed to be more cost-competitive model, Airbus had also raised strong support by offering to build the plane in Alabama.

The Air Force plans to replace 179 of its 400 KC-135 tankers. The first phase of the contract calls for Boeing to design, develop, manufacture and deliver 18 initial combat-ready tankers by 2017 at a cost of about $3.5 billion. Boeing’s tankers to be called the KC-46A Tanker, will be based on the Boeing 767 and built in Everett.

The contract represents an important boost to the Washington’s economy. Boeing has estimated that the contract would create a total of 50,000 jobs in the U.S., of which 11,000 jobs would be in Washington state. The decision could be particularly helful to aerospace suppliers, many of whom have suffered from delays in the Boeing 787 production schedule.

It’s unclear whether Airbus will appeal the decision.

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