Prediction: Boeing offers KC-767

Update: Defense News just published this article detailing the continuing problems Boeing has with the KC-767 Italian tanker, including the centerline hose-and-drogue problems we previously exclusively revealed in this column.

Original Post:

With Boeing and Northrop Grumman still in the Q&A stage with the USAF in advance of a Final Request for Proposals in the KC-X competition, we predict that Boeing will offer the KC-767 and not the KC-777.

Here’s why:

  • Boeing simply cannot afford another new airplane program right now. The KC-777 is only a concept airplane; Boeing would have to sink billions of dollars into the development of this derivative aircraft. The cost overruns and customer penalties for the 787 and, to a lesser extent, the 747-8, are already squeezing the company. Boeing is faced with the larger problem of potentially launching an entirely new airplane program in 2011-13 to replace the 777 to meet the forthcoming Airbus A350; or a enhanced derivative of the 777; and a re-engined 737 or a successor airplane, also within the 2011-2015 period.
  • The company has billions in “sunk costs” in the KC-767 International program. Financially, it makes far more sense to offer this airplane to the Air Force.
  • Offering a tanker based on the 777 will open Boeing to WTO issues. The European Community identified the 777 as a major beneficiary of “illegal” subsidies in its complaint to the WTO against Boeing. As long as US interests are attacking illegal subsidies provided Airbus on the A330-based KC-30 offered by Northrop Grumman, any 777-based tanker will similarly come under attack, assuming the WTO rules in the EU’s favor, as expected.
  • The 767 is less likely to trigger WTO issues. Launched in 1982, the 767–although included in the EU’s broad-based complaint (if we recall correctly)–the amount of “illegal” subsidies, if any, pales to that alleged for the 777.
  • Boeing still has development issues with the KC-767I (Italian) version. We understand the centerline hose-and-drogue system now is causing Boeing headaches. (Boeing declines comment.) Still, the last thing Boeing needs are the risks associated with an entirely new tanker in the KC-777.
  • A Boeing executive spilled the beans and said publicly, in front of more than 100 people, that the company was “leaning” (his word) toward the 767.

4 Comments on “Prediction: Boeing offers KC-767

  1. I think you are completely correct in your analysis.

    The 777 Tanker was in reaction to the surprise decision of the USAF and served as a temporary threat to the creation of the revised RFP.

    Boeing has no choice but to lead with the 767 but it is a good replacement for the first tranch of Tankers with less risk and cost than the Airbus multiuse model.

    The next round of replacements after this first order will go to Northrop and this larger model

  2. And because the KC-X will be scored on meeting minimum performance criteria and lowest cost. Boeing would be insane NOT to offer the KC-767 when no extra credit is given for exceeding minimum performance criteria.

  3. Pingback: Analyst: Boeing more likely to offer KC-767 « Machinists News

  4. re GATT92-WTO issues. The 92 GATT was the first
    time the subsidy issue re commercial aircraft was really addressed. prior to that, there were various tariff agreements relative to duties on parts and aircraft, but little relating to subsidy by governments.

    By 1992, the 767 had been flying for a decade, and most, if not all of possible R&D and related costs and so called subsidies re basic airframe had been amortized. Trade and other agreements cannot be retroactive. Additionally, by 1992 very few,if any, 767 airframes had been modified for military use, and even if there were a few, military use is outside of GATT.

    IOW- the WTO arguments were strictly related to commercial issues, which would put most of the A330 variations at issue in the tanker contest.

    IMO- the Airforce still will need a KC10/11 sized tanker replacement program within a decade, and perhaps at that time a 777- kc45 competition would be appropriate.

    The current competition, as was the initial lease program is Boeings’ to lose. Hopefully BA will find a way to NOT invent a NEW form of foot- bullet.

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