People talk at the Lockheed Martin booth during the Association of the United States Army (AUSA) Global Power Symposium and Exhibition in Huntsville, Alabama, US on March 28, 2023. REUTERS PHOTO/CHENEY ORR/File Obtaining licensing rights
WASHINGTON, Oct 23 (Reuters) – Lockheed Martin has withdrawn from a U.S. Air Force competition to build at least 75 refueling tankers, giving Boeing’s KC-46 Pegasus a boost in production, it said. The multi-billion dollar defense contract that is being closely monitored.
Airbus (AIR.PA) teamed up with Lockheed in 2018 to deliver the A330 multi-role tanker, but the European airline must now decide whether to continue competing without Lockheed as prime contractor. It said on Monday that it “remains committed” to supplying the US Air Force with a new tanker.
Lockheed’s withdrawal gives Boeing a boost, significantly increasing its chance of winning the program despite years of costly mistakes with the current fleet of KC-46 tankers.
Based on current prices, total demand could reach about $12 billion, but is likely higher. However, the KC-46 has drawbacks, including problems with the aircraft’s onboard video system and a refueling boom that fails to connect the tanker to aircraft seeking to refuel. These errors cost Boeing $7 billion in losses.
Boeing shares turned positive after Reuters first reported the Lockheed news, and rose 1.7%.
A win for Lockheed and Airbus would have given Airbus its first aircraft contract with the US Air Force after trying to penetrate the US defense market for two decades.
Monday’s news also marks the second time Airbus has been divested by a US partner. Airbus previously worked with Northrop Grumman to win a $35 billion contract in 2008 to build MRTT tankers for the US Air Force. These efforts were thwarted after Boeing’s protest succeeded in opening the way for the KC-46.
The Air Force, which aims to replace hundreds of Eisenhower-era KC-135 tankers in three batches, has launched a competition in 2022 for a second batch of 160 aircraft in addition to the 179 KC-46 Pegasus aircraft initiated by Boeing. . to construct. The United States later reduced efforts to 75.
Lockheed said it will shift its tanker team and resources to other programs including “aerial refueling solutions in support of the USAF’s Next Generation Aerial Refueling System (NGAS) initiative.”
NGAS is the final tranche of the current tanker replacement programme. It is expected to be announced and completed in the 2030s.
The abrupt departure from Lockheed’s bid, known as LMXT, caught some Capitol Hill aides by surprise. Advocacy for the LMXT, to be manufactured in Alabama and Georgia, was intense as Lockheed spent heavily to ensure Boeing’s plane had no chance of winning the second tranche.
In 2011, Boeing won the first of a three-phase procurement to replace the Air Force’s aging tanker fleet, receiving a contract for 179 KC-46 aircraft.
(Reporting by Valerie Encina and Mike Stone in Washington; Reporting by Mohammed for the Arab Bulletin) Editing by Chizu Nomiyama and Bill Berkrot
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