Countdown to Boeing strike?

Boeing and its International Association of Machinists union have entered intensive bargaining in the countdown to the September 1 contract expiration. The IAM has a strike vote scheduled for September 3; if 66.1% of the membership votes for a strike, they walk at 12:01am September 4. The last strike, in 2005, lasted a month. Here are several articles looking ahead at the next 10 days.

From Bloomberg News: Final Contracts Begin with 787 Scheduled at Stake.

Wall Street Journal: Big stakes riding in contract talks.

Everett Herald: Boeing, Machinists differ on progress in contract talks.

Everett Herald: IAM to Boeing: We’re willing to strike.

Some art on KC-767AT, “KC-764”

Flightblogger has some interesting art comparing the Boeing KC-767AT and a possible “KC-764” based on the 767-400 at its blog here. The art looks at the tail strike issue, a potential problem for the KC-764 discussed by Boeing at the Farnborough Air Show.

Update, 1:40 PM PDT: Reuters reports that the Final RFP is now expected next week. It was originally due Friday, then this week. There is a third meeting between Boeing and the USAF/DOD (Northrop is taking advantage of these meetings as well). Boeing is pushing its position that (1) the original RFP specifications should be the governing document in this re-bid or (2) if there are changes, the company needs more time to consider another airplane, such as a tanker based on the 777F or 767-400.

Internet chatter about the prospect of a tanker based on the C-17 seems to be just that. A Boeing spokesman tells us he knows nothing of a prospective KC-17.

Update, 2:15 PM PDT: With all this talk about Boeing potentially offering a KC-764 or KC-777 (or even a KC-17), the obvious question that nobody has apparently asked until now is whether Northrop/EADS might respond with a tanker based on the A330-300, a plane larger than the A330-200 on which Northrop’s KC-30 is based.

Well, we asked Northrop. The response:

“We are back in a competition so the last thing we are going to do is tip our hand as to our bid strategy. Nice try.”

Update, 3:45 PM PDT Aug. 21: Reuters has this update, looking at the prospect of a Boeing protest.

Corporate Website updated wk/8-19

(Due to technical difficulties, our update on the Corporate Website was temporarily requiring a password to access this week’s Commentary. This was resolved at 0900 PDT.)

Our Corporate Website has been updated for the week of August 19. Today we talk about–what else, these days–the USAF KC-X program.

With all the talk about the prospect of Boeing offering a tanker based on the 767-400 or 777-200F, we pull together thoughts about this and a table comparing the KC-135, KC-767AT, KC-30, a “KC-764,” a KC-777 and the KC-10.

We also talk about the prospect of Boeing doing a “no-bid” in response to the Amended Draft RFP, or filing a protest against the Final RFP, which is expected this week. And there is more.

Byran Corliss of the business magazine Washington CEO (as in Washington State, not that “other Washington,” as we say here on the West Coast) has a short commentary that is inflammatory to locals but absolutely true. He writes that Boeing doesn’t need the tanker business. (Boeing has acknowledged that, financially, it would be small potatoes, but officials do want the business.) Corliss also comments on the current labor negotiations. Corliss used to cover Boeing for The Everett Herald before joining CEO.

Final RFP due this week on Tanker; new podcast

It’s believed the Final Request for Proposals on Round Three of the KC-X tanker program will be forthcoming this week–it was due Friday, but another meeting with Boeing, Northrop, the USAF and DOD was held Saturday.

In the meantime, Innovation Analysis Group/AirInsight has produced another podcast on the subject. This one features Amy Butler, the senior Pentagon correspondent for Aviation Week magazine, Addison Schonland and Scott Hamilton. Butler gives her on-the-spot observations about the prospect Boeing could no-bid this competition; the potential for a Boeing offering with a KC-777 or a “KC-764” (767-400);commentary about the Draft RFP, and more. This podcast is 24 minutes.

Boeing’s tanker gambit

Flight International reports that Boeing might offer the 767-400, a plane roughly the same size at the KC-30, for the aerial tanker. This would delay the process beyond year-end and into a new Congress.

The Seattle Post Intelligencer has this column of interest, called “The tanker in mathematical terms.”

Boeing is meeting with the Air Force Saturday to further discuss the Draft RFP, as detailed in this Bloomberg story. This means-obviously-the Final RFP won’t be out today. The new FRFP timeline goal is next week, but we (and participants) think that’s still ambitious.

Northrop’s CEO Ron Sugar says Boeing “got what it wanted” out of the GAO protest, but is unhappy anyway. Here’s this story.

Richard Aboulafia has this comment on “Back to Square One.”

During the competition, Boeing often suggested the Northrop KC-30 was “gold plated.” That is, yes, the plane carried more fuel, more troops and more cargo than the KC-767, but everything above the requirements set forth by the Air Force was mission creep, or gold plating. Therefore, we could not help but think of Boeing’s position when we read this story. We think is aptly sums up Boeing’s view about mission creep.

Podcast on tanker

James Wallace from The Seattle Post-Intelligencer does a 15 minute podcast on the tanker issue with Innovation Analysis Group.

KC-777 or KC-767-400?

James Wallace of The Seattle Post Intelligencer has this excellent piece about the prospects of Boeing offering a KC-777 or a “KC-764”.

Update, 130 PM PDT: Innovation Analysis Group has this 7 minute podcast with Dan Beck, spokesman for Boeing’s tanker program. (Longtime spokesman Bill Barksdale has moved on to other duties within Boeing.)

Italy to penalize Boeing on tanker

Bloomberg just moved this story, reporting the Italy will fine Boeing for its late KC-767 tanker, following penalties assessed by Japan.

Update, 1145 AM PDT: We’ve been on the phone with reporters this morning discussing the tanker competition and what Boeing might do–the latter in the wake of the Aviation Week story that Boeing is considering adopting a no-bid position following the revised RFP that will give extra credit for extra fuel off-loading capability. We thought we’d recap our thoughts.

  • First, we don’t know what Boeing will do, but we think it will stick with the competition. We don’t think Boeing will have come this far to simply fold its tent and go away. Boeing has nothing to lose (except the cash costs associated with the re-bid) and everything to gain, even if winning is a long shot.
  • It’s to Boeing’s advantage to drag this out as long as possible, even if it loses. The longer Boeing can keep the contract from Northrop Grumman, the longer it stays out of EADS/Airbus hands. The longer the contract is denied Airbus, the longer before any US production facility is built. The longer no US production facility is built, the longer the pressure of the Euro-Dollar exchange rate hurts Airbus.
  • The longer the contract is delayed, the more the likelihood the World Trade Organization rules on the US-Boeing complaint over so-called “illegal” subsidies to Airbus. Although this doesn’t have a thing to do with the technical merits of the contract, an adverse ruling by the WTO (which is expected on at least some points) will become more political fodder for Boeing’s supporters in Congress.
  • The longer Boeing can draw this out, the better the chances in Congress. It’s presumed the Democrats will increase their majority in Congress in the November elections; the new members take office in January. The labor unions associated with Boeing’s bid are typically behind the Democrats, and the Ds are making the contract award to Northrop campaign issues for the presidency and in some critical Congressional races.
  • From a stockholders’ point of view (and we’re one of them), Boeing is doing what it needs to do.

Update, 345 PM PDT: The Financial Times is reporting that Boeing is sticking in the competition, at least for now, after its meeting with the USAF. The FT reports that Boeing is continuing dialog with the Air Force to refine the Draft RFP for a final RFP. Here is the story, though a subscription may be required.

Reuters reports that Boeing remains “discouraged,” however, in this story, citing defense analyst Loren Thompson.

Update, 800PM PDT: Business Week has this piece about Boeing staying in the competition, probably plans to ask the USAF to extend the timetable and some discussion about a “KC-777.”

US skeptical of CSeries launch aid

There are numerous reports today that the US Trade Representative may look at the proposed launch aid for the Bombardier CSeries airplane. This one does a good recap.

The CSeries is proposed to carry 110-149 passengers, which directly encroaches on the Boeing 737-600/700 and Airbus A318/A319 series. The USTR doesn’t care about the potential impact on Airbus, of course, but since the USTR filed a complaint against Airbus and the EU about launch aid to Airbus (the case is still pending), it’s only logical that the USTR and Boeing complain about launch aid to the CSeries.

But does Boeing truly care?

There were strong hints at the Farnborough Air Show by Boeing Commercial President Scott Carson that Boeing just might cede the market of 150-seats or below, though Carson declined to confirm to us that that’s specifically what he meant.

No bid for Boeing?

Aviation Week reports that Boeing may elect not to re-bid on the KC-X program. The story is here.

Update: 0840AM PDT: Boeing told us the Aviation Week piece is “news to us.” Boeing (and Northrop) meet with the USAF Tuesday (Aug. 12) to review the Draft RFP. If Boeing has anything to say publicly, it won’t be until Wednesday, we’re told.

Update, 945AM PDT: The Pentagon has issued what amounts to a gag order on any statement by the USAF or DOD on the tanker competition. See the report here.