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07 Nov 03. British Airways PLC (NYSE:BAB – News) said Friday it would consider selling its fleet of Boeing 767-300ERs elsewhere if a group that has agreed to buy the 21 planes doesn’t win a U.K. defense contract to convert them into aerial refueling tankers. (See ‘AirTanker CHANGES TACK AGAIN ON AIRCRAFT SELECTION’, BATTLESPACE UPDATE Vol.5 ISSUE 44, November 7th 2003).

“There would be advantages to selling the aircraft,” a BA spokeswoman said. However, he added that the airline would also be happy to keep the planes in service until the end of their useful lives in 2014. On average, the medium-haul 767s are 11 years old and BA could eventually look to replace them with new Airbus A330s or Boeing Co. (NYSE:BA – News)’s planned 7E7, say industry observers.

Tanker & Transport Service Co. Ltd., which includes Boeing and BAE Systems PLC (BA.LN) as shareholders, has contractually agreed to buy the Boeing planes from BA if it receives the contract. TTSC would convert the planes into tankers and provide an in-flight refueling service for the Royal Air Force over 27 years.

A U.K. newspaper reported Friday that Airbus has held tentative talks with BA about taking the 767s in partial exchange for an existing or future plane order from BA, assuming TTSC’s bid is unsuccessful. If true, industry observers say, the move would be more of a lobbying tactic by Airbus, whose parent company, EADS, leading the rival AirTanker consortium for the tanker contract.

The BA spokeswoman said the airline hasn’t received any formal proposal from another party for the 767s. “If they (TTSC) win the contract, they will get the 767 fleet,” she said.

BA is a strategic partner of TTSC, which also includes Serco Group PLC and Spectrum Capital as shareholders. If Airbus is proposing to take the 767s in partial exchange, the move “could be seen as an endorsement of the competitiveness of our bid,” said a spokeswoman for TTSC. Airbus couldn’t immediately be reached for comment.

The EADS-led AirTanker consortium also includes Rolls-Royce PLC, Thales SA (12132.FR) and Cobham PLC . It’s proposing to supply new or a mix of mainly new and used Airbus A330-200 airliners specially converted into tankers.

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