Northrop Grumman Corp. said Thursday that it will submit a bid for the U.S. Air Force's $40 billion aerial refueling tanker program after threatening last month to pull out of what it called an unfair competition.

Northrop called the government's requests for proposals "a very competitive offering that fully supports the Air Force's tanker mission" after reviewing the final language in the request for proposals document, the Los Angeles-based defense contractors said in a statement.


The nation's third-largest contractor is partnering with Airbus, a unit of Netherlands-based European Aeronautic Defense and Space Company, to compete for the contract against Boeing Co. The contract could be worth more than $100 billion over the next two decades.


Both teams are proposing to retrofit commercial airframes. The Northrop-Airbus team would use a new Airbus A330 and Boeing an older 767. The Airbus frame is about $40 million more per jet than Boeing's airframe, but Northrop contends it has expanded capabilities such as cargo space, fuel capacity and range.


Northrop said the original Air Force request gave too much value to financial factors such as the 767's lower cost.


Shares in Northrop were up 45 cents to $74.08 in midday trading Thursday.

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