Airbus "contract of the century" deal with US Air Force under threat

The tussle between Airbus parent company EADS (European Aeronautic Defence and Space Company) and its American rival Boeing over a billion dollar contract with the US Air Force, took another twist on Wednesday.

In a move which could signal a blow to EADS's chances of delivering on a contract it won back in March, the US government accountability office recommended that its arch-rival, Boeing, be allowed another chance to tender a bid.

At stake is a deal worth a whopping $35 billion to supply the US Air Force with 179 new aircraft - one of the largest military acquisition programmes in US history.

In March the Air Force awarded the contract to the US manufacturer Northrop Grumman and its European partner EADS. It chose the KC-45 - based on the Airbus A330 - ahead of Boeing's slightly smaller KC-767.

In upholding Boeing's protest, the accountability office said a number of errors had been made in the process of awarding the contract to Northrop and EADS and they could have effected the outcome of the competition to the detriment of Boeing.

Up until Wednesday's ruling EADS had publicly said that it was confident of the deal being finalised and indeed its chief executive, Louis Gallois, even though admitting he was disappointed by the latest development, tried to remain upbeat.

"We support our partner Northrop Grumman and remain convinced that the KC-45 best fits the demands of the US Air Force, " he said in a statement.

"It's important to recognise that the announcement is an evaluation of the selection process, not the merits of the aircraft."

Although the accountability office's decision isn't binding on the Air Force, it'll certainly increase the pressure for new bids to be made, thereby re-opening the door to Boeing and putting at risk the original deal.

The Pentagon itself recently recognised that errors had been made in evaluating the offer.

And of course the case over possible job losses on the other side of the Atlantic will be reopened at just the same time as the presidential election campaign swings into full gear.

Always Late In Takeoff and Late In Arriving

Hang about that’s an acronym for Alitalia. This has nothing to do with the Italians. But there again it IS an aeronautical story that has everything to do with failing to meet a deadline.

So the confusion could be forgiven.

No this time around it’s all about one company’s attempts to deflect attention from what is turning out to be a four-letter-word of a corruption cock-up à la Française with a triumphal tale of achievement!

The four letters are EADS. And the success story is the delivery of the first Airbus 380 - just 18 months behind schedule.

The A380 is the superjumbo set to take to the skies and revolutionise flying comfort – if we’re to believe the blurb. Change in the sense that it can carry over 850 passengers (if airlines decide to cram us all merrily into economy class) allowing us to relax more easily while we increase our collective carbon footprints.

France has a huge financial stake in the future of the A380 and the media here clearly decided that the Nation needed a morale booster when Singapore Airlines officially took delivery of the first of its 19 new ‘planes two weeks ago – just one and a half years later than promised. So what better way than trumpeting what France does best…..apart from striking of course…..corruption…..no sorry, that should read technological BIGness.

And we’re talking BIG here with more than a flourish of luxury.

The new giant of the skies will make its first passenger flight on Oct. 25. And Singapore Airlines has opted for a 471-sear version of the monster double decker. First class travellers will apparently be able to cut themselves off entirely from the rest of the world in their private “suites” while Business customers will have all the U.S.B. ports and in-seat power supplies for laptop computers the price of a ticket can buy. Even those in Economy will be able to swing their legs in more room than there is available for the proverbial cat.

Take off should come as something of a relief to all those concerned in the design and construction of the A380, which has been beset by persistent and costly delays, but there lurks a darker story in the background.

Airbus may well have delivered – and continue to do so at the rate of up to 45 a year by 2010 – but top managers at its parent company, EADS, are being investigated for insider trading.

Major shareholders in the Franco-German corporation sold massively just before news was released of significant delivery delays on the A380 back in 2006.

That news of course wiped billions of euros off the market value of EADS. The loss was a major blow to the taxpayer (the state holds a 7.5 per cent stake in the company) and a setback for Airbus.

An investigation may well be underway here in France, but so far everyone is denying everything and admitting to nothing. What a surprise.

The (now former) boss claims he didn’t pass on any information. The government was not informed. And nobody used prior knowledge for personal gain because everyone is innocent.

Meanwhile media attention has switched to the glories of French technology because apparently the two stories, although related, are not linked.

Once again French business practice flies high as it breathes new meaning into the term corporate responsibility and there will doubtless be plenty of under carpet sweeping before any truth is revealed – if it ever is.