Boeing 767 is likely to outlive tanker scandal

Experts are upbeat about jet as Air Force deal is shelved

October 09, 2004|By Susan Chandler | Susan Chandler,CHICAGO TRIBUNE

The decision by Congress to pull the plug on a controversial Boeing Co. tanker deal is raising new questions about the future of Boeing's 767 aircraft production line.

Late Thursday, congressional negotiators rejected a $23.5 billion contract that called for Boeing to supply the Air Force with 100 aerial refueling tankers based on its 767 commercial airframe.

The provision in the $446 billion defense authorization bill reverses an earlier, $23 billion multiyear agreement to lease and buy the tankers from Boeing for the Air Force. The 2005 authorization bill is expected to pass the Senate this weekend or after the Nov. 2 elections.

On Oct. 1, Darleen A. Druyun, the former No. 2 weapons buyer for the Air Force, received nine months in prison for angling for an executive position at Boeing that she eventually obtained. She admitted to steering the tanker contract and three other pacts to Boeing while in the Air Force post.

Michael M. Sears, then Boeing 's chief operating officer, remains under investigation for his role in Druyun's hiring. Air Force Secretary James G. Roche, Air Force acquisitions chief Marvin R. Sambur and White House budget official Robin Cleveland also are being investigated on alleged federal conflict-of-interest violations.

Starting from square one with a new contract could delay a tanker purchase by two years or longer, defense experts say. Without an imminent order for tankers, Boeing only has two dozen 767s left to build, which should take a little more than a year, according to analyst estimates.

The congressional move "leaves the 767 where it was a few days ago, a dying program with great upside potential," Richard Aboulafia, an aviation expert with the Teal Group in Fairfax, Va., said yesterday.

Under generally accepted accounting principles, Boeing should write off the 767 line as soon as it realizes it will have to be shut down, accounting experts say. But Boeing is unlikely to give up on its 767 line anytime soon, military analysts agree.

If it has to, the Chicago aerospace manufacturer will spend its own money to keep the line open as it has done in the past with other endangered production lines, said Loren Thompson, a military analyst at the Lexington Institute, a nonpartisan think tank in Arlington, Va.

In the late 1990s, Boeing spent tens of millions of dollars keeping its F-15 Eagle fighter line open until new orders came through, Thompson said.

A Boeing spokesman yesterday declined comment on the future of the 767 line. The 767 is assembled in Boeing's largest site in Everett, Wash., 30 miles north of Seattle. That's also where the company also puts together its 747s and 777s and will soon be making its 7E7 Dreamliner.

While it quashed Boeing's previous tanker contract, Congress authorized the Air Force to move forward with a new contract for 100 tankers that will be put out for competitive bidding.

Even in a bidding war with its archrival, Airbus, Boeing is likely to win that contract because it already has shown the 767 airframe can do the job, military experts said.

"It is extremely unlikely Boeing will get anything less than the lion's share of the aircraft," Thompson said. "In all likelihood, they will get every one of them."

There's no question the process will take longer, and more time means that Boeing has the option of changing horses.

It could decide to offer a tanker aircraft based on the airframe of the energy-efficient 7E7, experts say.

So far, Boeing has maintained that the 767 is the airframe of choice for tanker modification. That assessment has not changed, Boeing sources said yesterday.

The Chicago Tribune is a Tribune Publishing newspaper. The Wichita Eagle contributed to this article.

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