It's the news Boeing, its workers and lawmakers in Kansas and Washington state have waited years to hear. The Department of Defense and the Air Force have selected the planemaker to build its next generation refueling tanker, the KC-46A.
The long-awaited, long-delayed announcement came Thursday afternoon. The first phase of the deal is worth $3.5 billion. It calls for delivery of 18 aircraft by 2017. The contract is worth more than $30 billion.
The Pentagon says the contract with Boeing is already signed. Deputy Secretary of Defense William Lynn called Boeing "the clear winner."
Boeing will build 179 mid-air refueling tankers using its 767 passenger jet as a frame. The aircraft will be built in Washington state and modified in Wichita.
Boeing has promised the tanker contract would support and create approx. 50,000 U.S. jobs, including several thousand in Kansas. Boeing says the deal could have a economic impact in Kansas of nearly $400 million.
"We're honored to be given the opportunity to build the Air Force's next tanker and provide a vital capability to the men and women of our armed forces," said Jim McNerney, Boeing chairman, president and CEO. "Our team is ready now to apply our 60 years of tanker experience to develop and build an airplane that will serve the nation for decades to come."
His statements were echoed by the International Machinists and Aerospace Workers Association. "This is a spark that can turn the economy in another direction. This is a lot of work for many, many, many years," said Rich Michalski, general vice president of the IAM as quoted by Politico.
Experts say EADS, the other bidder, may challenge the decision as Boeing did in 2008. Boeing successfully argued the Air Force unfairly changed the rules midway through the bidding process.
EADS could still bid on subsquent contracts because the Air Force will need an additional 300 to 400 tankers to replace the current Eisenhower-era KC-135's. Many of those planes are stationed at Wichita's McConnell Air Force Base. Future contracts could be worth more than $100 billion over several decades.
"This is certainly a disappointing turn of events, and we look forward to discussing with the Air Force how it arrived at this conclusion," said Ralph D. Crosby Jr, Chairman of EADS North America.
The Air Force has been trying since 2001 to begin replacing its fleet. An initial $23.5 billion plan to lease and then buy 100 modified Boeing 767s fell apart in 2004 amid scandal.
Boeing's victory promises to breathe new life into the 767. The plane first flew in 1982 and despite updates over the years, has seen its orders shrink in recent years. The tanker victory allows the production line to continue and for Boeing to seek new orders for commercial aircraft.
The contract also means work for Boeing's suppliers and contractors including Wichita-based Spirit AeroSystems which produces the foward fuselage section of the 767.
"I think had it had happened a long time ago we probably wouldn't have seen the numbers of layoffs that we've seen in this community," said Steve Rooney of IAM District 70. "So for that I'm a little frustrated, and I'll be a lot more happy when it's over we have prevailed an appeal to this and move forward to start producing that aircraft."
Expect more on this story on Eyewitness Newscasts, here at kwch.com, and on Facebook (http://www.facebook.com/kwchnews) where you can join in the discussion. Share your thoughts on the decision and what it means for Boeing, Kansas and the country.
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