Northrop-EADS beats Boeing for U.S. tanker

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Northrop Grumman Corp and EADS, "clearly provided the best value to the government," Sue Payton, the Air Force's top acquisition official, told reporters at a briefing.

The Air Force plans to buy 179 tanker aircraft over the next 15 years to begin replacing its KC-135 tankers, on average 47 years old, that were built by Boeing Co.

The decision, which could still be challenged by Boeing or its backers in Congress, caps for now a saga that included a cancelled Boeing order and the Pentagon's biggest procurement scandal in decades - with jail terms for an ex-Air Force weapons buyer and Boeing's former chief financial officer.

Shares of Northrop, the Pentagon's No. 3 supplier after Lockheed Martin Corp and Boeing, rose as much as 6.5 percent in extended trading on Friday. Shares of Boeing, which was widely expected to win the job, fell as much as 5 percent before paring their losses to be down 3 percent.

"A major reversal of fortunes, and a truly surprising outcome," said Richard Aboulafia, of the TEAL Group aerospace consultancy, about Boeing's loss.

Boeing said it was disappointed with the outcome and would weigh its options after a detailed Air Force briefing on the reasons for the decision.

"We believe that we offered the Air Force the best value and lowest risk tanker for its mission," Boeing said.

The initial contract for the newly named KC-45 tanker, a modified Airbus A330 airliner, covers four test aircraft for $1.5 billion. With plans to buy 175 more planes, it would be worth $35 billion overall, the Air Force said in a statement.

NORTHROP'S EDGE

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