Britain warns EADS it could lose multi-billion dollar aircraft order

WAR.WIRE

Britain warns EADS it could lose multi-billion dollar aircraft order
LONDON (AFP) Nov 03, 2004
The British government has warned pan-European defence group EADS that it could lose a huge contract agreed earlier this year to supply the Royal Air Force with refuelling aircraft, a report said Wednesday.

The Ministry of Defence has told a consortium led by EADS that unless some contract issues are resolved, it would lose the massive deal, worth 13 billion pounds (18.8 million euros, 24 million dollars), the Financial Times said.

Citing letters sent by defence procurement officials which it had obtained, the business daily said EADS had been cautioned that the British government was starting "fall-back studies" to find a possible alternative supplier.

In one letter, Britain's chief military acquisition officer Sir Peter Spencer said that competing proposals would be "pursued vigorously" unless a final contract was agreed soon.

It was announced in January this year that the EADS-led AirTanker consortium had won the 27-year-long deal to provide the planes, seeing off competition from a joint bid by leading British defence contractor BAE Systems and US aviation giant Boeing.

The British deal is seen as crucial for EADS, the European Aeronautic Defence and Space Company, in pushing a tanker adapted from its Airbus A330-200 airliner as an alternative to Boeing.

Boeing, which had offered Britain tankers based on its 767 model, had previously enjoyed a virtual monopoly in the air refuelling market.

According to the Financial Times, Spencer warned AirTanker that one of his possible options for the end of this year was a recommendation that the deal be called off.

"A number of the detailed issues that we originally set out last January... have yet to be satisfactorily resolved," he said in a letter.

He added: "Whether and how quickly you gain a PB (preferred bidder) recommendation is therefore up to you."

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