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BOEING EXPECTS TO SIGN TANKER DEAL

17 Jul 02. Boeing Co. (NYSE:BA – News) Chief Financial Officer Mike Sears said that the aerospace company expects to sign a controversial deal to lease air refuelling tankers to the U.S. Air Force by the end of summer.

“I think we are in the short strokes and I would expect by the end of the summer that we would have an agreement signed with the USAF,” Sears said in a conference call with analysts.

Boeing and the Air Force have made progress working out the pricing and
financing of the deal, Sears added. Chief Executive Phil Condit said later in the call that he expected it to remain a lease deal.

No comment was immediately available from the Air Force.

Congress authorized the Air Force in December to negotiate a leasing deal with Boeing for 100 converted 767s to replace some 43-year-old KC-135 tankers in its fleet, but critics viewed the deal as a backdoor handout to Boeing after the Sept. 11 hijack attacks caused airlines to slash aircraft orders.

White House and congressional budget experts also argued that it would be cheaper to buy new planes or refurbish the old tankers than sign a 10-year lease with an estimated cost of $26 to $37bn.

Boeing officials argue that the lease deal makes sense for the government due to current budgetary constrictions, although they acknowledge that the government is able to borrow money more cheaply than other institutions.

Air Force Secretary James Roches told lawmakers in May that replacing the aging fleet of KC-135 tankers remained an urgent priority. He rejected suggestions that the Air Force could get by with its current refueling fleet for 15 years or more.

Leasing the converted 767s would give the Air Force much quicker access to new refuelling aircraft, he said.

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