Boeing Co. said Wednesday it will try to sell its new aerial
refueling tanker to South Korea as its long-running battle with
Airbus Group NV expands from commercial jets into specialized
military aircraft.
South Korea said this week it would invite bids by June for four
tankers in a contract valued at around $1.3 billion that is
expected to trigger offers from Boeing and Airbus, as well as
others that might seek to convert some of the global glut in cargo
jets into refueling planes.
Airbus last month won a coveted six-plane tanker order from
Singapore, which had been identified by Boeing and the Pentagon as
a potential customer for the KC-46A Pegasus, which the U.S. plane
maker aims to have in service with the U.S. Air Force in 2017.
The Boeing-built tanker is one of the USAF's three priority
programs that have been largely insulated from budget cuts, with
Boeing winning the final contract in 2011 after an decadelong
battle with a consortium that included Airbus.
Export sales are viewed as a part of keeping down U.S. costs on
the Pegasus program, which the Government Accountability Office
this week estimated will cost $45 billion, and the Pentagon plans
to intensify its own overseas sales push for the plane at an event
next week.
Maj. Gen. John Thompson, the Pentagon's head of the Pegasus
program, said the Air Force would promote the tanker at a gathering
of overseas defense attaches at Wright-Patterson Air Force Base in
Ohio next week. Boeing plans to showcase a Pegasus flight simulator
and other equipment at the event.
"The air force is doing what it can to assist Boeing in foreign
military sales and direct commercial sales," said Gen. Thompson at
a congressional hearing on Wednesday.
Boeing plans to build an initial 179 Pegasus tankers for the Air
Force, and executives had previously identified countries in Asia,
the Middle East and Latin America as potential customers for a jet
that will start replacing an existing fleet of U.S. tankers with an
average age of almost 50 years.
The Pegasus is a converted version of the Boeing 767 passenger
plane and is due to make its first flight later this year, while
Airbus is already selling its Multi-Role Tanker Transport based on
its own A330 commercial jet.
Airbus said it is also in talks about selling tankers to India,
having already secured orders from the U.K., Australia, Saudi
Arabia and the United Arab Emirates.
Boeing said other, unidentified nations are interested in the
Pegasus.
"We see a solid international market for the KC-46A," said a
Boeing spokesman, adding that the company would "definitely" pursue
a deal with South Korea. "We have received interest from multiple
countries about the combat capabilities of the KC-46 and we
continue to have active discussions with them."
While the Pegasus development program is on-time, it is
over-budget, with the Pentagon forecasting that building the
initial four jets may cost up to $5.85 billion compared with its
initial estimate of $4.4 billion to $4.9 billion. The fixed-price
deal leaves Boeing liable for all overruns above $4.9 billion.
Boeing doesn't disclose internal cost estimates or whether it
expects the development phase to be profitable, though does expect
to make money on the entire program, which is due to be expanded
with two further phases that would grow the U.S. tanker fleet to
479 planes, as well as possible overseas sales.
Write to Doug Cameron at doug.cameron@wsj.com
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