Boeing Shouldn’t Protest Tanker Deal

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Boeing (BA) executives, bewildered at losing a multibillion-dollar contract for a fleet of refueling tanker aircraft, are girding for battle as they lay legal groundwork for kicking up a more official fuss,the filing of a formal protest of a U.S. Air Force decision to buy from Northrop Grumman (NOC) and partner European Aeronautic Defence & Space (EAD.PA), BusinessWeek.com reports.


But even with billions at stake, shares tumbling, and an anticipated dent in earnings, there are some good reasons why Boeing shouldn’t complain,and just might not. Sources say these downsides, too, are being debated in the company’s executive suite and that no decision on a protest will be made until after a Pentagon briefing on the matter. Explains one Boeing source: “We certainly wouldn’t want to aggravate our customer”,the Air Force.


Even crafting a statement the company expects to issue Mar. 4 has proven painstakingly tedious, as insiders strive to strike a balance in tone. Executives want to convey their sense that the company was misled by the Air Force. If Boeing had known the Air Force was seeking a plane with more fuel-carrying capacity and cargo space, say company insiders and a congressional source, it would have based its proposal on the larger Boeing 777 instead of the 767. The result is likely to be an unusually frank statement on the company’s disappointment.


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