And the bids are in. On Thursday, the two teams competing to build the next generation of Air Force refueling tankers announced that they have submitted their final bids to the Pentagon.
In dueling press releases, both Boeing
Along with partners that include EADS, General Electric
You will doubtless be shocked to learn that Boeing disagrees. Its KC-767 Advanced Tanker (KC-767AT) will "meet or exceed all of the Air Force's mission requirements," burns 24% less fuel than the KC-30, and costs 22% less to maintain. What's more, in a swipe at its rival, Boeing pointed out that because the KC-767AT is a smaller aircraft, "nearly twice as many KC-767s can be based on a parking ramp compared to the competitor's oversized aircraft."
(Replied Northrop: "Did they just call me fat?")
Riding on Boeing's assertions of superiority are the fortunes of partners Rockwell Collins
Who's most likely to win this dogfight?
My money is on Boeing. I don't entirely buy its argument about cost savings -- Boeing's plane is smaller than Northrop's, so naturally will cost less to fuel and maintain. Thus, a better measure of cost-efficiency would probably compare the KC-30 to the KC-767AT in terms of which is cheaper to operate per unit of fuel delivered to the refuel-ees.
That said, Northrop entered this bidding war at a disadvantage when it buddied up with EADS. We've already seen how the strong euro/weak dollar dichotomy hurts EADS' profits on civilian airliners. And last month, EADS had to pull out of a bidding war for a Nordic fighter jet contract, possibly because it was getting underbid. So, unless Northrop's KC-30 is markedly more fuel-efficient than Boeing's offering under the standard I set, I expect Boeing will win this one on cost.
Believe it or not, the Fool is your source for all things investing and defense (investing). See: