EADS Disappointed By Tanker Delays

Chief executive believes tankers the company offered remain the best option for the Air Force and expressed disappointment that the Pentagon is pushing back its decision.

PARIS (AP) -- The chief executive of European Aeronautic Defence and Space Co. expressed disappointment Wednesday that the Pentagon is pushing back its decision on a $35 billion U.S. Air Force tanker contract.

EADS believes the aerial tankers that it offered with U.S.-based Northrop Grumman Corp. remain the best option for the Air Force in the competition against Boeing Co., CEO Louis Gallois said.

"We have a contract and will seek an appropriate conclusion to that contract," Gallois said in a statement. "We are disappointed by this decision from the U.S. Department of Defense."

EADS is the parent of European planemaker Airbus.

Gallois also insisted that the contract hasn't been factored into EADS earnings forecasts, and said that the decision will not have any impact on its sales or earnings before interest and taxes.

Northrop Grumman and EADS were awarded the contract to replace the Air Force's aging aerial refueling fleet earlier this year, but Boeing protested and a subsequent Government Accountability Office review found major flaws with the way it was awarded. The Pentagon reopened the bidding in August.

U.S. Defense Secretary Robert Gates told lawmakers Wednesday that he decided to cancel the current round of bidding on the plane -- a competition that has stretched seven years -- because the Pentagon's plan to award the contract by the end of the year no longer seemed possible given the complexity of the project and the rancor between the two companies.

The decision to delay the award until after the next president takes office in January is a victory for Chicago-based Boeing, which had threatened to back out of the competition. Boeing welcomed the Pentagon's decision.

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