Boeing Co. and Northrop Grumman Corp. submitted their final proposals for the Air Force's KC-136 tanker replacement program, as they compete in a $40 billion battle to replace the military's aging refueling tankers, the Wall Street Journal reports.

Chicago-based Boeing is competing for the contract against a team of Los Angeles-based Northrop and Airbus parent European Aeronautic Defense & Space Co. The tanker that wins the contract -- dubbed the KC-X -- will replace the Air Force's fleet of Boeing-built KC-135 tankers, which on average are 46 years old.

Separately, Boeing said Thursday that it delivered 441 jetliners in 2007, an 11% increase from a year ago. Going into the year, the aerospace giant said it expects to deliver between 440 and 445 airplanes. Fourth-quarter deliveries totaled 112 planes.

Boeing and European Aeronautic Defence & Space Co.'s Airbus both received more than 1,200 orders last year, a record for both firms. Many of the orders came from carriers in Asia, the Middle East and Europe, which have been expanding and upgrading their fleets. Boeing has moved back the deadline for the first deliveries of its new 787 widebody jet to late November or early December instead of May.

At stake in the tanker competition is an initial contract for 179 planes worth about $40 billion. With the addition of possible future tanker orders, the contract could eventually top $100 billion. The contract award is expected on or about Jan. 31, said Northrop.

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