Thursday, 3 March 2011

USAF Tanker Deal Escapes EADS,- No surprise there but some past precedents and an irony or two.

Indeed no surprise when the US press revealed that the $35 Billion tanker deal initially won by EADS with its new tech A330-200 derivative but subsequently challenged by Boeing and then subjected to some subtle changes/downgrading to the specification and the expected life extended from 20 to 40 years, is now going to the doyen of the US manufacturers with its version of the old tech Boeing 767. Who ever thought that EADS could really hang on in despite the weight of the long established giant?
Apart from that,and some initially uncharitable thoughts, there some interesting parallels and ironies in the story.The primary irony is that if Boeing had not slipped up so badly with its Boeing 787 programme and manufacturing and management processes, the production line would probably have closed now and the price of reopening it even for a programme this size would have been very high. Thanks to the 3 year delay,767 production has dribbled on and the new contract gives Boeing the opportunity to revitalise it with most of the aircraft platform costs written down and off years ago.
Despite the exception of Boeings' long haul large jet programme, the 707, having originally started in the early 1950s as the 367-80 jet tanker programme, tankers and maritime patrol aircraft have often been been bonus run-ons from long standing programmes. In the UK the Avro Shackleton and its Rolls Royce Griffon engines were the ultimate development of the wartime Lancaster/Lincoln and Merlin engine lines. The RAF choice of the Nimrod extended the production run of the basic DH Comet 4C airframe and probably just about saved the economics of Comet programme right back to the late 1940s. The government owed it one for having for a while given Britain the lead in passenger jet development. If metal fatigue hadn't turned the Comet 1 into a false dawn the lead could have lasted well into the 1960s and beyond. Was this the payback? A fairly won commercial deal or a government lifeline and payoff to a beleagured manufacturer? Like the 767 now, the Comet 4C platform was adequate in technology and just about in size when a 707 would have been bigger,better and a more comfortable, more modern alternative with room for more equipment and development. The UK's tankers have been converted bombers and more recently superannuated VC10s and Tristars. The purchase from BAe of the four returned ex East African Super VC10s got them out of an expensive hole while the subsequent purchase of BA's retired fleet for tanker conversion all gave BAe, Rolls Royce and BA a cash boost at welcome moments. Fair deal or really a subsidy? In the USA, the USAF 707s derivative orders must have helped Boeing to amortise development and production costs over much longer runs. The morphing of the end of production Lockheed Electra into the long lived maritime reconnaisance Orion was a more than welcome lifeline to Lockheed out after a marginal commercial success with the aircraft. The engine manufacturer, Allison who were significant on the Hercules too must have been happy too.
All these things enable Boeing to say that there is nothing unusual in a slighly sub optimal old technology airframe progressing to a new and very long life as a military tanker or transport against a much newer, larger and more flexible rival.They could claim that the proven reliability of long standing programmes can give greater reliability against newer and bigger higher technology aircraft so EADS have nothing to complain about. EADS might have a case that moving the goalposts after the race is over is unfair, and they may well feel they have suffered a costly injustice. It's unlikely though that a court case or reference to the WTO would profit anyone other than the salivating lawyers.

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