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AirTanker CHANGES TACK AGAIN ON AIRCRAFT SELECTION

06 Nov 03. The FT reported yesterday that, Airbus, the European air-craft maker, is seeking to undermine a bid from rival Boeing to replace the Royal Air Force’s tanker fleet by offering to buy the aircraft the US company is planning to use from current owner British Airways.

Airbus is understood to have held tentative talks with the airline about its fleet of 21 767s, which form the basis of the bid by the TTSC consortium, led by Boeing and BAE Systems, for the £13bn contract, the Ministry of Defence’s largest private finance initiative.

BA refused to comment yesterday on whether it had spoken to Airbus about the aircraft but said it had not received a proposal from any source other than TTSC.

The European aircraft maker is exploring ways it could take the aircraft in part exchange for an existing or future order from BA. The airline is due to take delivery of 10 Airbus A321s from October next year. BA said last night that if TTSC did not win the contract it planned to continue operating the 767s until 2014. However, it is understood the airline would rather get rid of the aircraft sooner as it is proving increasingly difficult to match them to suitable routes. BA’s desire to remove the US-built, twin-engined aircraft from its fleet as soon as possible is seen as an important issue that must be addressed by AirTanker, the rival consortium, which is led by Airbus’s parent, Eads.

If BA could be guaranteed it would not have to find another buyer for its 767s should the Boeing-led consortium lose, the airline’s powerful government-relations team would probably scale back its lobbying in support of the TTSC bid.

The competition is expected to become highly politicised in its final stages, with the announcement of the winner forecast for just before Christmas.

Boeing dominates the air tanker market, which could be worth up to $100bn (£60bn) over the next 30 years. An EADS official admitted that failure to win the MoD contract would put paid to any hope Airbus had of ending Boeing’s dominance. The British contract is crucial to both parties because of the government’s willingness to open the defence market to competition. Moreover, the RAF has the second largest refuelling fleet in the world after the US, and an excellent reputation in this specialist field, so its approval would give the winning bidder a boost.

Under the 27-year, private finance initiative programme, the winning team will retain ownership of the aircraft and offer refuelling to the RAF as a service.

Meanwhile the TTSC consortium continues to strengthen its team by the addition of three new partners, Rolls-Royce, Jeppsen and AMEC.

On November 3rd, Rolls-Royce was selected to do engine work for the TTSC consortium.

“Should TTSC be selected, Rolls-Royce would support the engines on the ex-British Airways fleet of 21 Boeing 767-300s,” TTSC said in a statement. A source close to the talks said Rolls would probably be asked to upgrade the engines, boosting the value of the 27-year maintenance contract. The aeroengine maker already maintains Rolls-powered tankers in the Royal Air Force’s fleet, a Ministry of Defence (MoD) spokeswoman said. A TTSC win would give Rolls maintenance work which British Airways currently has done by GE Aircraft Engine Services Ltd in Cardiff.

In another move to significantly de-risk the programme with the Royal Air Force, TTSC has entered discussions with Jeppesen, SBS International and Preston Aviation Solutions to develop an operations management system that will be fully compatible with the RAF’s new system for managing aerial refuelling and air transport operations.

Jeppesen, SBS International and Preston Aviation Solutions have recently combined their industry-leading aircraft scheduling and analysis tools to create a tailored solution for the RAF. The system, which manages flight plans, aircraft moveme

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