Update, 2:30 PM:
- Here are three PDF slides of information from the press conference, comparing the KC-45 with the KC-767 NewGen: KC-45 slides 7-08-10.
- Boeing does not plan a press conference with its tanker submission tomorrow-just a press release and a note on its Tanker Blog. We will create a separate posting for this information tomorrow.
- Addison Schonland has an 11-minute podcast with Airbus Americas Chairman Allan McArtor.
EADS will submit its bid today for the KC-X tanker competition. Boeing’s bid will be filed tomorrow, when they are due.
(Detour:) This just moved from Bloomberg: The release of the WTO’s Interim Report on the EU complaint about “illegal” subsidies to Boeing has been pushed from July 16 to September.We cannot help but be skeptical about this. Every time this report was due, with timing happening to coincide with a key date in the KC-X tanker competition, the WTO mysteriously postponed its release date. Call us conspiratorial, but it seems that multiple “coincidences” are at work here. The announcement came from the US Trade Representative’s Office. Hmmm…..
Here is the Airbus statement concerning the delay:
“We are surprised and disappointed by the last minute announcement of yet another delay by the Boeing subsidies panel,” said Thomas Enders, Airbus CEO.
“We are, however, not surprised by the apparent difficulties the WTO is faced with. We have said time and again that the complexity, interconnectedness and industrial significance of the Boeing and Airbus cases would strain the capabilities of the WTO.
“Since these cases were filed, the world has changed. In aviation, the previous duopoly marketplace is increasingly being populated by government-sponsored players, leaving Boeing and Airbus as those that, by any objective measure, benefit least from government support.
The ongoing struggle of the WTO to address the world as it was in 2004 (the date the cases were filed) raises the question whether it can succeed in its basic mission to create a climate for a negotiated settlement on the basis of fair market rules in the interest of both the industry and the employees on both sides of the Atlantic.
“Another delay is a disappointment. But we are looking forward to the Boeing subsidies panel report. It will eventually come, and it will show: Boeing has received billions of dollars in WTO illegal subsidies.
“The importance of this report is greater, however, than a simple vindication of the obvious fact that Boeing aircraft such as the B787 would not exist without government subsidies.
“When the two WTO reports are published, those nations whose industries are building the aviation technologies of tomorrow can consider the WTO’s views on the past to craft new market rules that efficiently guarantee fair trade, a level playing field and continuous technology investment.”
Here is today’s press conference with EADS in a running posting:
Airbus Chairman Allan McArtor (“AM”)
EADS North America CEO Sean O’Keefe (“SO”)
EADS North America Chairman Ralph Crosby (“RC”)
- This is a big day for us (with submission of bid). We delivered two copies of 8,000+ page proposal to Wright Patterson AFB. 440 pounds of submissions.
- It is a fully compliant proposal that satisfies all 372 requirements to qualify for KC-X.
- This is a task that is much more straight forward than in the past. For better or worse, this RFP is much more prescriptive than in the past.
- We feel very good about what we have to offer. The KC-45 is nearly identical to what we are delivering to RAAF (Australia) and this adds a great deal to how one assesses one’s own risk, where fixed price is a major share of the offering.
- There is a capability assessment (IFARA). We know what this airplane is and how it performs. This adds a great deal to our sense of comfort.
- There has been a lot of diversionary stuff going on in this town (Washington DC) that has nothing to do with what is rigidly prescribed by the USAF. There has been a lot of discourse on the question whether we are replicating what we are offering to RAAF. We have been taking time to talk about what our system can do rather than what the other guy can’t do.
- We have 650 flight hours on our two tankers. The other guy doesn’t have a tanker flying that represents what they will offer the AF. We have boom contacts, passed fuel, etc.
- We support 48,000 jobs in the US. We create economic benefit. We have not done a great job of highlighting that we have committed to building A330-200 freighters in Mobile if we get the tanker contract, and we see the potential to making the total number of jobs three times the 48,000 jobs.
- Considering the unfortunate circumstances of the Gulf oil spill, this kind of economic impact in Mobile and the Gulf coast is all the more important.
- We have offered a real value proposition.
- What matters is what the proposal asks for, not issues raised in the other discourse. AF is asking for primarily a refueling tanker. The rest is a bonus. The KC-45 is larger, more efficient and a set of capabilities is more than the competition and the best value.
- O’Keefe is talking but sound quality is virtually non-existent for his mike.
- Our intent is to put together a proposal to win. It has every intention of being successful.
- We are expected (by USAF) on the first day to perform.
- This is not a proposal just to put one in and see what happens.
- RC: The Pentagon and SecDef himself have given direction to proceed down this path. Barring extraordinary effort to bring to bear things that are not relevant to the criteria, it will be a fair competition. If the merits of the case are as described in RFP, I believe it will be adhered to. The issues that matter were described in Draft RFP and Final RFP. You haven’t seen us disrupt the process politically. We have proceeded down the path as described in RFP.
- SO: The SecDef and Pentagon have consistently chosen not to deviate from the RFP despite pressure from Congress.
- RC: We find ourselves in the odd position of defending the Administration in what they said they are going to do, while other people try to bring in extraneous issues.
- RC: When price and value intersects, we have won every time (on previous competitions).
- AM: Boeing’s arguments that military procurements can ignore WTO Article 23 prohibiting use of ruling is “BS”. Article 23 prohibits it, period.
- RC: The WTO ruling isn’t prescriptive.
- AM: There isn’t a WTO ruling anyway, there is just a panel report right now.
- RC: USAF has said it has no intent to consider it.
- RC: We will have a more cost-efficient production at 7-8 airplanes a month with the A330 than Boeing will when producing tankers (at the rate of 1.25 a month).
- SO: There are a lot of elements that go into the costs of an airplane. The first one is are there development costs? We have developed the tanker; it is flying today. We have a finite range of development costs and can quantify what these known costs are. I don’t know our competitors can say the same thing. They have to determine the scope of the risk they will assume to develop an aircraft that doesn’t exist. This is a big variable.
- AM: WTO delay in issuing its report is very disappointing. There is now a two month delay. I have to ask you what your perception would be on this coincidence that on the 16th, the eve of the Farnborough Air Show, where Boeing will unveil its most subsidized airplane ever, the WTO report on Boeing’s illegal subsidies is delayed. The process smells like last week’s fish. You deserve a more detailed and honest answer. I am not saying the WTO is at fault at all but somehow the process has gotten off track.
- RC: This is crucial. This is the defense acquisition for some time to come. There is nowhere near a dire a need in other acquisitions as this is for tankers. There is no way to under-value this from a US perspective, or from an EADS North America perspective, and its 200 suppliers.
Press conference ends.