Air tanker deal provokes US row

Boeing's loss of a $40bn contract to build a new in-flight refuelling aircraft for the US military has drawn angry protests in Congress.

Lawmakers from Washington state and Kansas, which have big Boeing plants, voiced "outrage" that it had gone to a consortium including Europe's Airbus.

The planes will be assembled in Alabama but constructed largely in Europe.

Boeing has said it is awaiting an explanation from the military before deciding whether or not to appeal.

The new aircraft, named the KC-45A by the US Air Force, is based on the Airbus A330 and will be manufactured in partnership with US defence firm Northrop Grumman.

Its job will be to refuel the vast array of US warplanes and the contract is worth in the region of $40bn over 15 years.

It is a huge blow for Boeing, the BBC's Vincent Dowd reports from Washington.

America has around two-thirds of all such aircraft in use anywhere, and a senior figure in the company said recently if it lost this contract it could be out of the refuelling market totally for years.

'Outsourcing'

Gen Arthur J Lichte, commander of the US Air Force's Air Mobility Command, said the winning design had many advantages over Boeing's tanker.

"More passengers, more cargo, more fuel to offload, more patients that we can carry, more availability, more flexibility and more dependability," he said.

In Everett, Washington state, a few dozen Boeing workers protested outside a Machinists Union hall holding up signs saying "American workers equal best tankers" and "Our military deserves the best".

Congressional lawmakers from the state's Seattle area issued a joint statement condemning the "outsourcing" of the contract.

"We are outraged that this decision taps European Airbus and its foreign workers to provide a tanker to our American military," they said.

Todd Tiahrt, a Republican congressman from Wichita, Kansas, called for "an American tanker built by an American company with American workers".

"I hope the Air Force reverses its decision," he added.

But the news was a boon for Alabama Republican congressman Jo Bonner.

"We are so very excited about having the opportunity to help the Air Force acquire the most modern and capable refuelling tanker - a tanker assembled in America by Americans," he said.

The deal will also safeguard thousands of British aviation jobs, the BBC's Andy Moore says. Wings will be made at factories in Bristol and in North Wales.

Breaking through

For Airbus's parent company, the European Aeronautic Defence and Space Company (EADS), it is a long-desired and potentially crucial breakthrough into the US market, our correspondent says.

Replacing America's ageing KC-135 refuelling planes - which date back to the 1950s - has proved controversial, he notes.

In 2002, the Air Force negotiated a $23bn deal with Boeing for 100 tankers to be based on the Boeing 767.

But that deal was declared invalid after allegations of fraud.

Two Boeing executives went to jail and eventually Boeing's chief executive resigned.

Political pressure on the Air Force over the deal was led by Sen John McCain, the front-runner to win the Republican nomination for the presidential elections this year.

Our correspondent adds that two further contracts are expected later as the US Air Force replaces the rest of its ageing fleet of refuelling craft.

Boeing eyes Latin America growth

Demand for air travel in Latin America will see the region buy more than 1,700 planes worth $120bn (£59.3bn) over the next 20 years, Boeing has predicted.

Plane travel in the region will grow on an annual basis of 6.6% over the two decades, the planemaker forecast, second only to China's expected growth.

Single-aisle jets will make up about 80% of orders, the firm said.

Earlier this year, Boeing estimated the world's airlines would spend $2.8 trillion on new aircraft by 2026.

This figure included freight planes as well as passenger jets.

Latin America is seen as an attractive growth area for the aircraft industry because of the large distance between places, poor existing transportation links and an increasing number of people able to afford air fares.

New aircraft as well as existing planes and purchases of used planes will take the region's fleet size to 2,420 by 2026, Boeing said.

But large jets, such as Boeing's 747 and Airbus's A380, will make up less than 1% of new deliveries, according to the projections.

Russia unveils new passenger jet

Russia has unveiled a new passenger jet it hopes will establish its place as a global seller of commercial aircraft.

The 110-seat Superjet 100 has been developed by state-run business Sukhoi, in conjunction with Western partners including US giant Boeing.

Aiming to rival similar-sized models from Brazil's Embraer and Canada's Bombardier, the plane will undergo test flights later this year.

Sukhoi aims to make up to six planes a month for foreign airlines by 2010.

Diversification plans

"The first plane of the new Russia is of great importance, a priority project, because the domestic market is not enough for a world economy," said Russia's First Deputy Prime Minister Sergei Ivanov.

Analysts say that if the plane is a commercial success, it would be a major realisation of Russian ambitions to diversify away from its current reliance upon oil and gas exports.

Italy's Alenia, and French groups Snecma and Thales, are also involved in the $1bn (£500m) project.

The first plane was unveiled at a factory in Komsomolsk-on-Amur in Russia's Far East.

Russian flag-carrier Aeroflot has already placed an order for 15 Superjets, at a cost of $400m.

There are 73 orders in total, with the others coming mainly from Russian regional carriers, but Italian regional airline Itali also plans to buy 10 planes.

The Superjet retails for $28m, which is 25% lower than the rival Embraer 190.