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Feedback of US Tanker bid - "THE" Boeing's Challenge

Posted on March 8 2011 by Julien Maire in US, USA, KC-46, KC46, AirTanker, Boeing, EADS, USAF

KC-46

KC-46

Feedback of US Tanker bid :

After that Boeing won the bid, most analysts have come to the same conclusions that I was supporting.

Here's the full shot of my conclusions on this contract:

  • Boeing had no choice except to win this contract.

Otherwise, this would have greatly jeopardized its position towards the Pentagon :

  1. Lost of credibility

  2. Open-equal with competitors

  • Concequently, its aggressive bid is a real challenge:

  1. Risk of overcost: high

  2. Risk of delay: average

  3. Risk of loss / in-question of the contract (including options): low

  4. Commercial image: Large increase

  • If successful:

  1. Credibility (towards the Pentagon): average/low gain

  2. International credibility: Large increase (success) / Medium increase (semi-successfully)

  • In case of failure or partial failure:

  1. Credibility (towards the Pentagon): significant decline

  2. International Credibility: mid / low fall

  3. Commercial image: low fall

  • In case of failure (or partial failure) while EADS NA wins the AAS helicopters contract:

This is where EADS has all his playing card. Under the combination of these two conditions, EADS could become the Pentagon's preference...

  1. Credibility of Boeing (towards the Pentagon): significant decline

  2. Credibility of EADS (towards the Pentagon): Large increase

  3. Commercial image of EADS : average increase

  • ... become the Pentagon's preference, yes, but why?

In particular the market for tactical transports aircrafts (cargo aircrafts). Today, the USAF received its last C-17. After the year 2013 it did not order more.

Due to that, it is reasonable to think that the USAF will launch a proposal bid for a new generation airlifter with first deliveries in 2018...

At this time, the A400M (note: smaller than the C17) will be reliable and operational in several NATO countries.

  • ... A government / military program, why?

Actually, the direct impact on the commercial image is less than the business marketing itself.

However, there are at least 3 reasons for the interest of these companies with military and government contracts:

  1. The credibility towards the civilian market (commercial market) is still increasing (this because of the reliance by an authoritative body) and can make a difference.

  2. This ensures a long-term book. And multiplication of these contracts provide a "comfortable mattress" in the long term.

  3. This helps to develop new technologies and / or acquire full mastery of these technologies.

(The development of such technology has the advantage of being insured by the government book, larger and safer than a sum of commercial contracts).

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