US Congress Kills Plan For Air Force To Lease Boeing Tankers

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Washington (AFP) Oct 10, 2004
Congress has killed a proposal by aerospace giant Boeing to lease, then sell, to the US Air Force dozens of its 767 tanker jets, paving the way for European rival Airbus to muscle in on a possible deal.

Lawmakers in the US House of Representatives and the US Senate in separate votes Saturday gave final approval to a 422 billion-dollar defense funding bill, including a provision allowing the Air Force to buy outright up to 100 of Boeing's refueling tankers.

But lawmakers rejected a 23 billion-dollar multi-year agreement to lease and buy Boeing tankers for the Air Force.

The decision comes on the heels of a new round of ethics probes related to the proposed program, which has already landed one federal official in jail and is threatening several others.

"The bill brings the Air Force's plan back to square one," said Arizona Senator John McCain, a chief opponent of the tanker deal.

Boeing spokesman Doug Kennett said the company would continue to push for new tankers, citing a military need.

"The need for new aerial refueling tankers is clear," he said. "We will continue to work with the Air Force."

The end of the leasing deal could open up competition to Boeing's archrival Airbus, Boeing has already lost substantial commercial market share to the European plane maker.

The North American wing of European Aerospace and Defence Systems (EADS), the company that owns 80 percent of Airbus, is preparing for a new run at a tanker contract - a bid it lost to Boeing in 2002.

"We'll bring a competitive product to what should be a competitive place," said Ralph Crosby, the chairman and chief executive officer of EADS North America.

US Defense Secretary Donald Rumsfeld put the tanker replacement question on hold several months ago until studies on military needs and options were completed, with no decision on tanker replacements until next month at the earliest.

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