Economics Report - Boeing Protests Air Force Contract on Tankers

A deal awarded to a U.S. competitor, teamed with the parent of Europe's Airbus, angers some lawmakers in Congress. Transcript of radio broadcast:

13 March 2008

This is the VOA Special English Economics Report.

Must a country buy from its own defense suppliers? This is one of the questions in Washington in a dispute over a deal worth at least thirty-five billion dollars. The contract will supply the Air Force with one hundred seventy-nine tankers.

The Air Force says it has a serious need for new planes to refuel aircraft in mid-flight. Boeing has a long history of supplying tankers to the Air Force.

But on February twenty-ninth, the Air Force awarded the contract to another American company, Northrop Grumman, teamed with EADS. EADS is the European Aeronautic Defense and Space Company, the parent of Airbus.

This week, Boeing protested the decision. The Government Accountability Office will study the appeal and expects to have a report by June nineteenth.

Boeing says it found problems in the process used to reach the decision. The Air Force has called the process fair and open.

But the decision not to give the contract to the Chicago-based company has angered lawmakers in Congress from states with Boeing factories. These include Washington state and Kansas.

Boeing offered a version of its Seven Sixty-seven airplane for the new tankers. Northrop Grumman and EADS based their tanker on the Airbus A-Three-Thirty. That plane is larger and would be able to carry more fuel.

There is debate about the possible effect on American jobs because production would be split between Europe and the United States. There is also dispute about what the deal could mean for national security. In any case, Boeing says the Air Force changed requirements in the middle of the competition.

Boeing and Airbus each had record numbers of orders last year for commercial airplanes. Demand is strong in Europe and Asia. But this week, EADS reported a loss of six hundred eighty-five million dollars last year, after a profit in two thousand six.

Airbus has had delays with its huge, new A-Three-Eighty passenger plane. A weak dollar also played a part in the loss.

Boeing has had its own problems with its new Seven Eighty-seven Dreamliner. To build it, the company is using a new system of suppliers around the world. Boeing says the Dreamliner could enter service early next year. Many buyers are waiting, but the new plane has not even had its first flight. The latest progress report is expected by the end of the month.

And that's the VOA Special English Economics Report, written by Mario Ritter. For more news, go to voaspecialenglish.com. I'm Steve Ember.

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