Boeing Battles Airbus for Korean Tanker Contract

April 3, 2014 by Paul Ausick

Boeing KC-46A
Source: The Boeing Co.
The government of South Korea has announced that it will seek bids for four military refueling tankers in June, and Boeing Co. (NYSE: BA) said on Wednesday that it intends to compete for the contract. Last year, Boeing lost a contract with South Korea for 60 fighter planes that most observers thought was in the bag.

The Chicago-based aircraft maker beat back Airbus in 2011 for a new tanker contract with the U.S. Air Force. Under that deal, Boeing will deliver 179 KC-46A tankers to the Air Force beginning with a first delivery of 18 in August of 2017.

Airbus beat Boeing on a contract for six tankers with the city-state of Singapore and has said it is in talks with several other countries, including the United Kingdom, Australia, Saudi Arabia and the United Arab Emirates. Boeing said other nations are also interested in the KC-46A but has not identified them.

Boeing’s bid to sell South Korea 60 of its F-15 Silent Eagle fighter jets was thought to be in the bag last August. Then the country’s legislature voted the deal down following criticism that the plane lacked stealth capabilities. Boeing was the only plane maker to meet the country’s bidding requirements for the plane, and the contract would have been worth about $7.7 billion.

South Korea has not yet issued its bidding requirements for the fighter plane contract, but contenders include Boeing, Airbus and Lockheed Martin Corp. (NYSE: LMC). Lockheed’s F-35A stealth fighter is believed to have the inside track.

Boeing’s KC-46A tanker is based on the company’s 767 model and is expected to make a first test flight later this year. Airbus is already selling its Multi-Role Tanker Transport, which is based on the company’s A330 model.

The KC-46A made news two weeks ago when development costs for the new tanker were reported to have risen by $1.1 billion.

Boeing closed up fractionally on Wednesday, at $128.31 in a 52-week range of $83.91 to $144.57.