I can sum up my reaction to Boeing's
Asked about the approaching deadline for submitting a bid on the Air Force's KC-X Tanker Project, Boeing CEO Jim McNerney responded as follows: "I really want to win it, and the chances ... are very high we're going to bid." What's strange here is that Boeing would even suggest that the chances of its bidding are anything less than 100%.
With analysts positing a $35 billion price tag on this first, 179-plane installment of the Air Force's tanker fleet overhaul, it seems axiomatic that Boeing would want to win this one.
According to McNerney, and contrary to everything that everyone else (including yours Fool-y) has said, there's a very real chance that Boeing will lose this thing, which would mark Boeing's second loss in a row to Europe-based EADS on the KC-X bid. McNerney warned that EADS will bid "aggressively," setting up "a dangerous situation for Boeing."
You see, according to Chicago-based Boeing, the substantial subsidies EADS has received from European Union governments gives EADS extra room to maneuver, reducing costs and possibly allowing EADS to underbid Boeing on the fixed-price KC-X contract.
Also, as I've pointed out in recent weeks, the rapidly devaluing euro (the currency in which EADS pays many expenses) relative to the U.S. dollar (the currency in which it would get paid if it wins KC-X) sets up an attractive proposition for EADS. Unlike Boeing, which sources its 767-derived tanker parts primarily from U.S. suppliers such as Honeywell
In this context, you could even say that Northrop Grumman's
Call me an optimist, but in the end I believe Boeing's national security argument, raised last week, will ultimately win it this contest, regardless of cost. Toss in Congress' overwhelming support for Boeing, expressed in last week's House vote, and the odds still seem to favor Boeing's winning.
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