Analysis: EADS unlikely to protest tanker defeat


Europe’s EADS is unlikely to drag out a battle for a huge US Air Force tanker deal because what counts now is keeping a foothold inside the world’s largest arms market as it tries to be a global player.

Newly admitted to the club of companies allowed to bid for such classified US work, EADS officials see a glimmer of hope in defeat as they cling to an ambitious goal of generating US$10 billion in US sales beyond core Airbus jetliner orders.

Analysts say the defeat will increase pressure on the cash-rich company to make good on a pledge to boost its US presence through acquisitions, Reuters reports.

Boeing won the US$30 billion-plus contract on Thursday.

EADS declined to say whether it would use its right to protest ahead of a briefing with US officials on Monday. But officials gave the strongest possible indication EADS would turn the page, without fully closing any options.

Chief Executive Louis Gallois told employees in an internal memo on Friday that EADS had helped to keep the price down for US taxpayers by getting a cheaper price from Boeing:
“This role will certainly be recognized in the future, and will definitely reinforce the chance of EADS and all its activities to strengthen its position as a strong partner of the US armed forces and a real US industry player.”

And in exclusive comments to Reuters, Airbus Chief Executive Tom Enders looked beyond tankers to stress future business.
“We have given our competitor a tough fight and forced them to offer a very low price. For Boeing, losing this would have been a disaster, for us it is only a lost business opportunity,” Enders said in an interview by email.
“The Pentagon has learned to appreciate the high professionalism of our work and our offering,” Enders said. That’s not a bad basis for future programs in the United States, for which we will compete again with superior products.”

Boeing said it had offered an aggressive price, while still protecting shareholder value.

Having earned a seat at the top table with the world’s largest contractors as a U.S. prime contractor, EADS wants to stay and protesting could hinder the perceived benefits of co-operating with the Pentagon.

One senior executive at a U.S. defense company said EADS, still trying to get a foothold in the U.S. market, faced a different set of conditions in pondering a protest than U.S. companies that had more established ties with the Pentagon.
“They’ve got to be very careful, especially given the Pentagon’s comments about the competition being open and fair and not even close” said the executive, who was not authorized to speak publicly.

A few analysts still expect Congress to weigh in and split the orders between Boeing and EADS, particularly if output problems arise.