Airbus Ready to Compete Again for U.S. Air Force Tankers

Airbus Group CEO Allan McArtor says he feels no schadenfreude from thegrowing pains the Air Force is experiencing with a new refueling tanker aircraftmade by his company’s archrival The Boeing Co.

The European aircraft maker five years ago lost a $35 billion bid to supply the U.S. Air Force with refueling tankers after a protracted and highly political fight, including allegations that the bid rules were written to favor Boeing, which offered a smaller plane.

But all that is water under the bridge now. “As a former U.S. Air Force fighter pilot, I take no pleasure in seeing difficulty with the KC-46 program,” McArtor tells National Defense in an interview. “It’s really essential that the Air Force recapitalize its tanker fleet.”

In private conversations with Boeing leaders, McArtor says he wished them success. “I told them, ‘You have to get that airplane flying, you have to get it going because the Air Force needs it.’”

It is no secret, however, that Airbus has big ambitions to become a major player in the U.S. defense market, and winning a tanker contract is no small part of the grand plan. As chairman and CEO of Airbus Group Inc. — overseeing the company’s businesses in the United States, Canada and Latin America — McArtor has long been a strong proponent of building a commercial aircraft assembly line in the United States. An Airbus manufacturing plant officially opened earlier this month in Mobile, Alabama.

Having a domestic industrial foothold is central to the company’s efforts to win Pentagon contracts, he says. And McArtor is convinced the Air Force would consider buying an Airbus tanker to supplement the Boeing 767-based KC-46A fleet.

“At some point, I firmly believe, the Air Force is going to recognize that a split fleet is just fine,” he says. Boeing is poised to build 179 tankers but the overall requirement is for more than 500 to replace the current aging fleet. “Because of the need for additional tankers, there’ll be a time in the next few years when we’ll be able to compete once again for some Air Force tankers.”

The Air Force could reopen the competition for the next batch in about a decade, after the first 179 are acquired. McArtor estimates that, by then, the service will be eyeing a larger airplane with longer legs, like the Airbus 330 multirole tanker transport.

The Air Force selected the Boeing tanker in 2011 in a second round of competition that initially was won by a Northrop Grumman/Airbus team in 2008 but was subsequently protested successfully by Boeing.

There were lessons to be learned from that contest that will help Airbus in the future, McArtor says. “The Air Force did get what it asked for, twice. When it asked for best value, best capability, they selected our tanker. Then they changed the spec for a technically compliant, lowest cost and they got what they asked for there too.”

The KC-46 is “limited in what it can do, even on its best day,” he says. “It’s limited in range, in off-load capability. Assuming that it does everything it’s promised to do, it’s still insufficient.”

Air Force leaders celebrated the KC-46A’s maiden flight Sept. 25. "The KC-46A will provide critical refueling capacity and enhanced capabilities to the war fighter," said Secretary of the Air Force Deborah Lee James. "This flight represents progress and brings us a step closer to fielding this much needed aircraft."

It was a confidence boost to Airbus that it beat Boeing in a $1.3 billion competition to supply South Korea with four aerial refueling tankers. Boeing had been aiming for South Korea to become its first foreign customer for the KC-46.

“We won every international competition we bid on,” McArtor says. Airbus withdrew as a contender for Japan’s tanker program, however. “We saw that Japan was heavily invested in the 767,” he says. “It didn’t make sense for us.”

The A330 is now refueling U.S. fighter jets in the Persian Gulf and “it’s doing just fine,” he adds. The Airbus tanker is now in the middle of qualification trials in Australia, a key military ally of the United States that will use the tanker to refuel F-35 joint strike fighters.

McArtor recognizes that an Air Force tanker deal will be a steep hill to climb, but says the company is motivated to take it on.

“We have a renewed energy to assert ourselves into the defense and space market,” he says. “In the past we have been somewhat content to be the largest defense contractor in Europe but we want to be a competitive contractor in the United States as well,” he adds. “Over the next several months and years, you are going to see the Airbus Group go up with the best of them.”
If a future competition required that military tankers be built domestically, Airbus would expand its facilities in Alabama, he says. “That is our industrial home. If we had an opportunity to bid on a tanker program, that is where it would be.”

The opening of a U.S. manufacturing plant is a huge milestone, McArtor says. Even if it is a commercial operation for now, it is still a boost to Airbus’ marketing efforts at the Pentagon, he notes. “It’s already helped us from a perception point of view.”

The company currently spends about $16 billion a year in the United States to support its Europe-based manufacturing, but that is not enough to secure political support for a big-ticket defense program, he says. “Despite all the money we spend here, we are not truly an industrial player until we have a factory that creates jobs.”

The company has taken other steps in recent years to improve its standing as a military contractor. One was to bring its various autonomous businesses under the Airbus brand. Another was to change its shareholder structure after a brief courtship with BAE Systems that ultimately collapsed. The reorganization was intended to combat the perception of foreign influence in how the company is run. “We still have shares owned by Germany, France and Spain, but they have no say in naming directors or influencing our company,” says McArtor. “That has been recognized by the Department of Defense.”

McArtor was determined to have Airbus acquire helicopter maker Sikorsky when the company was put up for sale last year. That would have given Airbus a significant U.S. presence but Lockheed Martin ultimately won the $9 billion prize. “I would have liked to buy Sikorsky,” says McArtor. “I was personally very interested. We bid as aggressively as Lockheed did but we didn’t get it. That would have been a great acquisition for us.”

Topics: Aviation, International