Airbus Teams With Lockheed to Renew Tanker Challenge to Boeing

(Bloomberg) -- Airbus SE is set to renew a long-running battle with Boeing Co. to supply tanker planes to the U.S. Air Force after partnering with American defense giant Lockheed Martin Corp.

The companies said Tuesday they've agreed to pitch Airbus's A330 jetliner-based multi-role tanker transport, or MRTT, to plug a shortfall in the Air Force's mid-air refueling capabilities and also develop entirely new programs. The structure of the collaboration is set to be worked out in the new year.

Airbus is once again targeting the U.S. military tanker market after a $35 billion contract to build 179 new planes was controversially handed to Boeing in 2011. The U.S. company's initial winning bid was overturned amid claims of impropriety and later awarded to its rival, only for Airbus's own proposal to be blocked by U.S. authorities, with Boeing triumphing in a final decision.

Airbus and Lockheed are teaming up after the Air Force flagged an increase in the number of refueling aircraft required over coming years, in part due to higher utilization of existing planes that led it to issue a formal request for information to the industry in June.

The requirement could lead to the accelerated retirement of the U.S. fleet of KC-135 tankers, a sister model to the Boeing 707 that first flew in the mid 1950s.

Boeing, which has been the sole supplier of aerial refueling planes to the Pentagon since 1948, beat Airbus to the 2011 contract with the KC-46 tanker based on its 767 commercial jet -- a model that has since suffered repeated delivery delays.

Toulouse, France-based Airbus's failed bid was originally made with Northrop Grumman Corp. before the U.S. company pulled out amid the legal and political wrangling over the contest. Lockheed Martin, based in Bethesda, Maryland, will contribute its expertise in systems integration, manufacturing and maintenance involving large airlift and tanker aircraft, according to a statement.

To contact the reporter on this story: Benjamin Katz in London at bkatz38@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Andrew Noël

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