Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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What next for EADS, Airbus in US?
With plans to assemble the KC-45 in Mobile (AL) in shreds, what’s next for EADS and Airbus in the US?
EADS and Airbus said creating a final assembly line (FAL) for the KC-X would lead to assembling A330-200Fs there as well. Without the tanker, the business case for the freighter FAL in Mobile didn’t exist, said officials.
The tanker contract is gone and Airbus now has a backlog of only some 50 A330-200Fs.
Odds and Ends: Boeing to compete production site for new 737-class airplane
Odds and Ends begins below the photo.
We’re not big on photos but every once in a while we find one that we’ve very impressed with–like this (via Airliners.net) at LAX:
EADS KC-X briefing: No protest
Here is a three page PDF of the slides from the Press Conference: EADS-NA Press Briefing Slides 3-04-11.
EADS today confirmed widely reported stories that it will not protest the USAF contract award of the KC-X tanker to Boeing.
Ralph Crosby, Chairman, and Sean O’Keefe, CEO of EADS North America present.
The following are all paraphrased quotations, not word-for-word direct quotes.
Tanker updates: More financial analysis, 2020 market share
As interested parties and aviation geeks wait for EADS to make (likely not) and announce its decision (as soon as March 4) on whether to protest the USAF contract to Boeing on the KC-X aerial tanker, more updates have come in.
First is a new market share forecast by G2 Solutions of Kirkland (WA). Next is a new updated from one of our readers, who goes by the screen name OV-099. He previously provided a detailed analysis of where he thinks EADS and Boeing came out on pricing. He updates this with more Net Present Value analysis and other economic data.
Both new items are below the jump.
Pricing the KC-X: $163m estimate for Boeing, $169m for EADS
One of our readers, with the screen name OV-099, provided a comment on our Dewey Defeats Truman post calculating the possible prices on the KC-45 and the KC-767.
OV-099 has been a long-time poster and when the occasion arises, does in-depth analyses on financial terms. We’ve cross-checked his work with others and found his numbers-crunching to be pretty spot-on.
With that in mind, we asked OV-099 to take a final look at his original posting with the thought of elevating it to a primary post. He has slightly revised his numbers. What follows is his analysis of how much EADS and Boeing priced their KC-45 and KC-767 in the bids to the USAF. His analysis is below the jump.
Update, 1-:30 am: OV-099 has further refined his analysis; the update is below.
“Dewey defeats Truman” perfect prediction in KC-X tanker contest
Note: here is the link to the tanker transcript.
Podcast: Richard Aboulafia talks to Addison Schonland.
Richard Aboulafia of the Teal Group said it best: the upset Boeing win over EADS in the KC-X tanker contest is the “Dewey Defeats Truman” moment of this contest.
For those who don’t know this reference, see here.
Aboulafia predicted EADS would win. So did Michel Merluzeau of G2 Solutions in Kirkland (WA). And Loren Thompson, a paid Boeing consultant. We did, too. So did Daniel Tsang of Aspire Aviation and even the Boeing shills in Europe did.
Boeing officials thought they were going to lose and so did its supporters in Congress.
Don’t protest, EADS: it’s time to move on
In a previous post, we opined that whoever lost the KC-X contract should accept the decision and let the Air Force move forward with the award without a protest.
We reiterate this view now.
Throughout the competition, EADS praised the USAF for its fair and open process, and its integrity, and when the Air Force inadvertently passed on company information to Boeing and EADS that belonged to each other, EADS praised the USAF for handling the mistake properly.
X-Day, Part 2: and the Winner is: Boeing
Boeing has been awarded the contract for 179 KC-X tankers.
What are the ramifications?
Is this contest over?
As we noted in a previous post, not necessarily. A protest can follow. EADS has said it won’t unless it finds something “egregious” in the process, which it has commended so far. But don’t consider it a given that EADS won’t find reason to protest. Still, we think it unlikely based on what we know today.
Why wouldn’t EADS protest?
EADS sorely wants the contract. It would be a huge boost toward its goal of reaching $10bn a year in Pentagon contracts, from $1.5bn today. But by competing for the KC-X contract at the Pentagon’s request to do so, it built up a lot of good will for future contracts. There would be little to gain from a protest.
Will Congress go along? There is a strong EADS contingent.
That’s all it is, a contingent. There aren’t enough EADS supporters to force a reversal. They still could block an award, but if EADS doesn’t put up a fight, it’s unlikely they will, either.
What’s next?
The timeline of what’s next is listed in this post. As the cliche goes, “it ain’t over until the fat lady sings.”
X-Day: The winner of the tanker contest announcement at 5:10pm EST
Update, 0930 PST: DOD has confirmed, the award will be announced at 5:10 PM EST and broadcast on The Pentagon Channel.
Original Post:
The Pentagon Channel will provide coverage, if the past is followed today. The time is 5pm EST. Update: A Tweet from AvTips says 4:45pm, without citing sources, so we suggest having everything ready by that time.
You can bet the media in Mobile (AL), Wichita (KS) and Seattle (WA) will also provide breaking news coverage. We know for sure that KIRO-TV plans to do so. We expect Twitter members will be ready to go, include Reuters Aerospace coverage.
Tanker decision expected Thursday, Feb. 24, 5pm EST
It now appears the USAF will announce the tanker contract Thursday, Feb. 24, at 5pm EST. Expectations are that EADS will be awarded the contract, but there have been so many twists and turns that we’re not predicting the outcome.
The greater question will be, Will there be a protest? As we reported Monday, EADS says it won’t protest if it loses provided there is nothing egregious in the selection process. Boeing has clearly been laying the groundwork for a protest, but neither is it certain Boeing will do so if it loses.
Here is the timeline of what happens next:
- The announcement is made.
- The Department of the Air Force has 10 calendar days to brief the losing side.
- The losing side can request an accelerated debrief.
- The losing competitor then has 10 calendar days from the time of the debrief to file the actual protest with the GAO.
- The GAO then has up to 100 calendar days to rule on the protest (they may take less time).
- The results can be: 1.) GAO finds no merit and throws out the entire protest; 2.) GAO sustains part of the protest; 3.) GAO sustains all of the protest.
- The GAO does not rule on whether or not the Department chose the right aircraft, which aircraft was better, etc. It only rules on whether the proper process was followed during the source selection.
- The Department can then accept the ruling and provide a timeline for how they will address the issues the GAO ruled on and determine whether and how it impacts the outcome. Or, they can note the GAO ruling but proceed as originally planned.