Pontifications: Assessing the advantages Boeing, Lockheed Martin-Airbus have in KC-Y tanker competition

 Fourth in a Series

By Scott Hamilton

Jan. 3, 2022, © Leeham News: As the US Air Forces gears up to solicit bids for its KC-Y aerial refueling “bridge tanker” competition, Boeing is now the incumbent tanker supplier.

Having won the KC-X competition against Airbus, Boeing is supplying a total of 179 tankers based on the 767-200ER. The KC-46A, however, has been plagued with problems, delays, and cost overruns.

As the incumbent, Boeing would seem to have an advantage in the KC-Y competition. But on the other hand, the problems that Boeing has had in technical compliance categories, failures, and delivery delays, and foreign object debris issues, could work against it.

Sean O’Keefe was the president of EADS North America, Airbus’ parent when Boeing won the KC-X contract. He also worked for the government as the NASA administrator and on The Hill. He was friends with Bob Gates, the Secretary of Defense during parts of the Bush 43 and Obama administrations. This gives him a special insight from government and industry perspectives to weigh the advantages and disadvantages Boeing faces in the anticipated KC-Y contest that will likely pit the incumbent against the Lockheed Martin-Airbus team that will once again offer the A330-200-based tanker called the LMXT.

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Pontifications: Applying commercial production principles to the A330 MRTT

Second in a series.

By Scott Hamilton

Dec. 13, 2021, © Leeham News: When EADS, the forerunner of Airbus Group, pondered whether to proceed on its own to compete with the A330 MRTT for the US Air Force’s aerial tanker competition, the factors went well beyond the tanker.

Plans for the Airbus A320 program, production ramp-up, and potentially a US final assembly line also were weighed.

“An assessment was made as a consequence of having been through the competition once before and learning from that,” said Sean O’Keefe. O’Keefe was CEO of EADS North America at the time.

Then, O’Keefe said in an interview with LNA in October, was the realization of what Airbus was doing to really ramp up production on A320s. Airbus had a plethora of things to figure out what that would take.

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Pontifications: Retrospective of KC-X tanker competition

The first in a series.

By Scott Hamilton

Dec. 6, 2021, © Leeham News: The US Air Force began the process this year to procure the KC-Y aerial refueling tanker.

By Scott Hamilton

Originally, this was to follow the KC-X (awarded to Boeing in the form of the KC-46A) to replace the McDonnell Douglas KC-10. This has been altered to be a bridge tanker between the KC-X and the KC-Z, an advanced tanker design that is in the conceptual stage.

The KC-Y promises to be a contest between Boeing, for more KC-46 orders, and a partnership between Lockheed Martin and Airbus based on the A330-200 MRTT. MRTT stands for Multi-Role Tanker Transport. The Lockheed Martin plane is called the LMXT, for now.

The KC-X competition was bitter and repetitive. A partnership between Northrop Grumman and Airbus initially won the contract. But Boeing protested how the USAF scored the bake-off. The General Accounting Office upheld the protest. A new competition saw the contract awarded to Boeing.

KC-Y is only in the Request for Information stage and neither Boeing nor Lockheed have submitted filings yet. But already, the surrogate Boeing campaign appears underway.

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Pontifications: Biden’s new “Buy American” policy may hit Lockheed Martin-Airbus plans to compete in KC-Y tanker bid

By Scott Hamilton

Aug. 2, 2021, © Leeham News: A move by the Biden Administration may have unintended consequences in the KC-Y Bridge Tanker procurement by the US Air Force.

The Bridge Tanker is the Air Force’s second round to replace the aging Boeing KC-135 fleet. Between 140-160 airplanes will be purchased under KC-Y. The Air Force awarded a contract to Boeing in the previous KC-X procurement for 179 tankers based on the 767-200ER platform.

President Joe Biden announced last week that the US will adopt a rule under its Buy American policy that American content must be increased from 55% to 60% immediately and ultimately 75%.

If adopted, the rule appears to all but preclude an expected proposal by a partnership between Lockheed Martin and Airbus (LMA) to offer the KC-330 Multi-Role Tanker Transport (MRTT). This is based on the A330-200 platform.

Lockheed Martin did not respond to a request for comment.

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HOTR: USAF prepares for new tanker competition, pitting Lockheed Martin/Airbus and Boeing against each other

By the Leeham News Team

June 22, 2021, © Leeham News: The US Air Force appears to be preparing a new round of competition for the next phase of its aerial refueling tanker recapitalization.

The first, KC-X, took more than 10 years to award a contract that didn’t get overturned. Boeing initially was awarded a lease deal in 2001 that was canceled in the wake of a scandal that sent two Boeing officers to jail and led to the resignation of CEO Phil Condit.

Round two pitted Boeing against Northrop Grumman and EADS, which was the name of the parent of Airbus’ commercial unit. Northrop won, but this award was overturned when USAF improprieties were revealed in the debriefing.

Round three pitted Boeing against EADS alone after Northrop bowed out. Boeing won this contract with a price 10% below EADS, which didn’t contest the decision. Boeing since has written off about $5bn on the KC-46A tanker, which still doesn’t work as required and which was delivered nearly two years late.

Related stories:

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Union asks Congress to intervene in Boeing inspection issue

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By Bryan Corliss

April 15, 2019, © Leeham News: As Boeing faces federal investigations, shareholder lawsuits, Congressional hearings – and possibly subpoenas – linked to the 737 MAX crashes, another issue flying low on the radar could further complicate the company’s relationship with the Federal Aviation Administration and the elected officials who oversee it.

The issue revolves around the company’s plan to end quality control inspections for several thousand tasks performed by Boeing mechanics in the factory.

That plan – first reported by The Seattle Times in January – involves the use of more “smart tools” to perform work more precisely so that inspections will no longer be required for thousands of tasks. Instead of doing quality checks 100% of the time, as Boeing inspectors have been doing for generations, inspectors will sample 1-in-100 tasks, or maybe less, Boeing executives told the newspaper.

Now, the union for inspectors whose work is going away is asking its influential supporters in Congress to intervene with the FAA. It wants a chance to show the agency data it says proves that the new process will lead to more downstream rework on the assembly line, more injured workers and more production delays.

Summary
  • Borrowing from the auto business
  • Union says bad decisions put deliveries at risk
  • Boeing says new system brings down defects
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Pontifications: I don’t know what to make of this

By Scott Hamilton

April 1, 2019, © Leeham News: One can’t help but think, a lot, about the two Boeing 737 MAX crashes and the facts that Boeing created the system, linked it to one sensor, not two, didn’t tell the airlines pilots about it, didn’t include it in pilot manuals, didn’t have a safety alert system as standard equipment, initially blamed the Lion Air pilots and reportedly lobbied Donald Trump not to ground the airplanes.

But my thoughts haven’t stopped here.

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2019 Outlook: Boeing’s decision on NMA is the headline to watch

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Introduction

Dec. 21, 2018, © Leeham News: It is a stretch to say 2019 is a pivotal year for Boeing.

There would have to be events of tsunami proportions to be pivotal for a company with revenues of more than $90bn.

But there is no doubt 2019 will be a very important year for Boeing.

Summary
  • The headline to watch will be the widely anticipated launch of the New Midmarket Aircraft, also called the 797.
  • The 777X begins flight testing next year. Sales are stalled for the newest airplane of the Boeing family.
  • The proposed new joint venture between Boeing and Embraer is expected to be consummated by the end of the year.

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Tanker wars may be back

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Introduction

Dec. 10, 2018, © Leeham News: The tanker wars may be back.

Airbus has teamed with Lockheed Martin to offer the Airbus A330-200MRTT to the Pentagon in a for-hire business model. The agreement also provides the prospect of “conceptualizing the tanker of the future.” (The press release is here.)

From 2001-2011, the US Air Force, Pentagon and even Congress were embroiled in controversy over recapitalization of the USAF aerial refueling tanker fleet.

The KC-135s, based on the Boeing 707, were aging, expensive to maintain and outdated.

After 9/11, Boeing proposed leasing 100 tankers based on the 767-200ER to the USAF. A scandal surrounding the USAF approval of this deal sent the air force’s procurement office and Boeing’s CFO to jail and resulted in the resignation of CEO Phil Condit. The lease deal was canceled.

Summary
  • Three rounds of tanker procurement were filled with improprieties, bitter charges and counter charges.
  • Boeing currently has a contract for 52 KC-46A tankers out of an initial procurement of 179.
  • The air force sees a need for 100 more tankers on an accelerated timeline.
  • Fee-based refueling is not unknown to the Pentagon.

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Boeing cash flows generously, KC-46A snarfs up some of it

By Dan Catchpole

 July 25, 2018, © Leeham News: The cash keeps flowing at Boeing. The aerospace giant posted free cash flow of $4.3bn for the second quarter of the year, despite recording $426m in costs related to its delay-ridden KC-46 tanker program.

Despite posting strong earnings, the charge rattled investors, who drove Boeing’s share price down in early trading Wednesday.

Boeing continues to work on closing the business case for its New Midsize Airplane (NMA), a business case unlike any the company has done before, Boeing chief executive Dennis Muilenburg said in a conference call with reporters and investment analysts.

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