EADS North America, the U.S. holding company for European Aeronautic Defense and Space Co., will bid against U.S. rival Boeing to win a $40 billion contract to outfit the U.S. Air Force with 179 refueling tankers.

"EADS North America, as prime contractor, will bid on the KC-X competition," Defensenews.com quoted EADS North America Chairman Ralph Crosby as saying in Washington. "This is a hell of an opportunity for a company in the big airplane business."

EADS plans to submit a bid by July 8, the deadline extended by the U.S. government to enable the Europeans to return to the competition.

EADS had planned to bid with its U.S. partner Northrop Grumman, but the Los Angeles company last month pulled out of the race, arguing the bidding conditions clearly favor U.S. rival Boeing.

The European Commission called the decision by the European-led consortium to drop out "highly regrettable" and warned of U.S. protectionism.

"The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract," it said in a statement.

EADS had requested a deadline extension so it could alter its bid or find a new partner. The Europeans are confident that their plane -- the KC-45 tanker based on the Airbus A330 - can make the cut.

"The development costs of this aircraft will be substantially less than the (Boeing) tanker," Crosby said. Still, "we've got to beat Boeing's (bid) price, what's that going to be, we'll do our best to try to figure it out," he added.

Boeing is bidding with an altered version of its 767, called New Generation Tanker, a plane slightly smaller than the KC-45.

EADS claims its model is more powerful and proven in 500 hours of flight testing, while Boeing's plane hasn't taken off yet.

"We've got less distance to go" in terms of system design and demonstration, Crosby said, adding that cost increases were more likely with Boeing's bid.

EADS is still looking for additional partners to boost its bid.

Companies including the United States' Raytheon and L-3 Communications, as well as Britain's BAE Systems have been mentioned.

The bidding war goes back several years.

The KC-45 won the contract in February 2008 but the decision was overturned four months later by the Government Accountability Office after Boeing challenged it. The GAO said it found problems with the bidding and the contract is up for grabs.

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