23 May 03. The Boeing Co., has won a $16bn contract from the Air Force on Friday to lease 100 modified 767 jetliners for use as refuelling tankers.

The deal is a major windfall for Boeing, but critics call it little more than corporate welfare. The cost of leasing the planes, which does not include a $4bn purchase option at the end of the six-year lease, is far higher than the cost of buying the planes outright, opponents complain.

“It’s a lousy deal for the Air Force and for the American taxpayer,” said Republican Sen. John McCain. Pentagon officials contend the lease deal, which still must be approved by Congress, allows the Air Force to begin replacing its aging the KC-135E tanker fleet three years earlier than planned and requires less upfront costs than a straight purchase.

With an average age of over 43 years, the current tanker fleet is the Air Force’s oldest combat weapons system. The new planes will carry 20 percent more jet fuel than the current fleet and can be refuelled in flight themselves, Air Force officials say.

“People don’t think of tankers as being that essential in our national security, but they should,” said Republican Sen. Pat Roberts. The contentious deal has been delayed repeatedly as McCain and other critics questioned the price. Each plane is expected to cost $138m, including $7m in leasing fees. That price is significantly lower than Boeing’s earlier estimates.

Congressional supporters of the leasing deal have maintained pressure on the Pentagon for more than a year. The lease plan allows the Air Force to get 67 new tankers in the next six years, as opposed to one in an earlier plan to buy the aircraft, said Edward “Pete” Aldridge, the Pentagon’s chief of weapons acquisition. Buying 100 tankers would have cost $8bn over the next six years, which would have had to have been taken from other military programs, Aldridge said.

The first leased tanker is scheduled for delivery in 2006, with up to 20 planes a year to be delivered after that, Aldridge said.While the deal was important to the Air Force, it was crucial to Boeing because it preserves thousands of jobs.

Comment: This announcement reinforces the Boeing-led FSTA team bidding for the UK £20bn PFI requirement. Now the US, Italy and Japan have chosen the 767 option. Not only will this deal relive the need to store the aircraft in the desert, continuing refurbishment of the old Boeing civil fleet for military options will create an outlet for airlines wishing to upgrade their fleets to new Boeing aircraft.