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European Aeronautic Defence & Space Co NV (EAD.YY) is likely to say later Tuesday that it will enter a bid for a multi-billion-dollar competition to supply airborne refuelling tankers provided it can find U.S. partners, industry sources said Tuesday.
Senior executives from EADS' North American unit and Airbus have scheduled a press conference for 1800 GMT in Washington to make an announcement concerning the KC-X tanker deal that could be worth up to $35 billion.
Speculation that EADS will make a bid as prime contractor for the program to supply 179 tankers to replace the U.S. Air Force's ageing fleet of flying gas stations has been mounting since its partner in a previous bid, Northrop Grumman Corp (NOC), withdrew from the race, claiming that the terms imposed by the Pentagon skewed the competition in favor of a rival offer by Boeing Co (BA).
Boeing is offering a version of its 767 airliner that industry sources say would be cheaper than the Airbus A330 proposal, but would have less carrying capacity.
An EADS spokesman declined to comment further on the announcement beyond saying that the company has to express an interest in bidding now for the Pentagon to agree to extend the deadline for a fresh bid for the politically-charged contract. Europe's leading aerospace company would have until July 9 to tender a new bid.
Northrop Grumman was the prime contractor for a the previous bid, with EADS supplying airframes of its A330 airliner that would be transformed into tankers at a plant in Alabama.
EADS has been talking to possible U.S. partners about a making a fresh bid, with EADS taking the leading role this year. EADS needs a local partner as under U.S. procurement rules foreign-owned companies are prevented from supplying classified military equipment to the U.S. Armed Forces.
EADS chief executive Louis Gallois said in a recent interview that EADS had been talking to Raytheon Co (RTN) and L-3 Communications Holdings Inc (LLL) about joining it in a bid for the KC-X.
Industry observers noted that the timing of EADS' announcement may not have been chosen by accident. Boeing plans to announce its first-quarter results on Wednesday.
-By David Pearson, Dow Jones Newswires; +33140171740, email@example.com