Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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US Aerospace’s AN-112KC
When a small company called US Aerospace announced it teamed with Ukraine’s Antonov to offer an aerial refueling tanker called the AN-112KC, observers from all over the industry scratched their heads in puzzlement.
First, few had heard of US Aerospace. It turns out that this is a “Pink Sheet” publicly traded company that is in financial difficulty. A “Pink Sheet” company is a mechanism in which stock of companies that typically cannot qualify for the major exchanges can be traded, or stock that is called “Penny Stock” is trade. Penny Stock is stock that sells for, well, pennies. Bankrupt companies are also often traded on the Pink Sheets.
US Aerospace is in default of significant debt and it has owed back taxes to the US government. It latest quarter report indicated around a half-million dollars in cash.
O’Keefe fate unknown; assessing impact on tanker competition
The fate of Sean O’Keefe, CEO of EADS North America, who was among those on the de Havilland DHC-3 Otter than crashed and killed five of the nine people on board, remains unknown. Former Alaska Sen. Ted Stevens, for whom O’Keefe once worked, was killed, according to NBC and CBS news.
O’Keefe reportedly was traveling with his son. The elder O’Keefe often accompanied Stevens on fishing trips.
EADS NA is in a controversial and bitter competition with The Boeing Co. to win the contract for the KC-X USAF aerial tanker. Whether O’Keefe was among those killed or serious injuries require a long recovery period, his absence from the EADS leadership is unlikely to affect the company’s effort to win the contract.
Buying Russian for US lift
We have, from time-to-time, joked that the USAF ought to buy a Russian aerial tanker as a way to avoid the Boeing-EADS-Northrop-Airbus rhubarb in the long-running KC-X saga.
Well, here’s news that the US Navy is planning to buy Russian helicopters and United Technology’s Sikorsky helicopter division is not at all happy with this sole-source selection.
Let’s see if all the Buy American crowd gets as wound up over this one as they have in the KC-X contest.
Tanker award to slip to 2011?
Update, Aug. 6: Here is a Pentagon spokesman reacting to the US Aerospace protest over being rejected for its KC-X bid because it missed the filing deadline by five minutes, as reported by The Dayton Business Journal:
In a press briefing Thursday, Pentagon Press Secretary Geoff Morrell said the notion that any U.S. Military personnel deliberately interfered with the company’s attempt to deliver a bid is “absolutely absurd.”
“Listen, the other two companies that bid on this went to great measures to ensure that their bid arrived at the prescribed time … This is not a high school homework assignment, okay? These deadlines count and any professional contractor understands that,” Morrell said.
Update, August 4: This falls into the Holy Crap, What’s Next? department. The Seattle PI has the latest in the saga of the KC-X procurement. US Aerospace–the one with the Russian tanker proposal based on a plane that doesn’t exist–has filed a protest with the GAO over being denied the right to bid on the contest on a technicality.
Original Post:
In what has become perhaps the longest-running and certainly most tiresome story in Defense procurement, there is increasing speculation that the USAF contract award for the KC-X tanker might slip from November 12 into 2011.
Heidi Wood, the aerospace analyst for Morgan Stanley, wrote in her report on Boeing earnings last week that the award might slip. She did not elaborate in her note, but in an email to us expressed her skepticism of the November 12 date, given the history of this procurement.
Tanker face off at Farnborough
Boeing and EADS held tanker briefings this week–Monday for Boeing, Tuesday for EADS.
Boeing offered up top program officials while EADS offered up two American crewmen from its test flight program, a pilot and a boom operator. Boeing’s briefing was a standard presentation followed by Q&A; most of the briefing was taken up by the formal presentation.
EADS was an interactive briefing with reporters after a few brief remarks, with nearly the entire session devoted to Q&A.
French union understands “Buy American” on tanker
Update, July 19: Airbus says CGT is fourth Union out of five for Airbus in France, representing about 10 percent of Airbus employees in France.
Update, July 16: We received this from CGT: the union severed ties in 1978.Christian and Jean-Jacques were amused and laughed about the Airbus response.
Original Post:
Only a few days after EADS and Boeing (and the long-shot bid from US Aerospace-Antonov) submitted their bids for the $35bn KC-X contract to supply tankers to the US Air Force, a French union at Airbus declined to endorse the EADS bid.
The Federation des Travailleurs de la Metallurgie, or CGT, holds the position that the French military should buy its equipment from French industry and to be consistent with this position, told us that it understands the “Buy American” approach of Boeing supporters.
Airbus and EADS dismissed the CGT’s view as that held by a minority union concerned about outsourcing and off-shore jobs.
Questioning the effect of the WTO
We’re not the only ones questioning the effect of the recent WTO ruling against Airbus and its illegal subsidies.
A respected business writer from The Seattle Times has weighed in with this opinion piece.
We’ve long been cynical of the WTO and the Airbus/Boeing complaints as little more than political talking points. We’ve noted before the ineffectual rulings that Canada and Brazil illegally subsidized the Bombardier CRJ and Embraer EMB-jets, and nobody imposed sanctions.
Boeing offers KC-767 to USAF
It’s now official: Boeing submitted a bid for the KC-X competition, offering the KC-767 NewGen tanker.
Boeing did not schedule a press conference, so the initial press release detailing its bid is below the jump, with our reporting following the PR.