US Aerospace, a small cash-strapped US company, said it has joined forces with Antonov, the state-owned Ukrainian plane builder, to enter the hotly contested competition to build a new generation of aerial tankers for the US military.
It's the latest twist in a nearly decade-long, drama-filled saga likely to end with a government contract worth around $$50 billion to the winning bidder. Bids are due by next Friday.
One analyst immediately dismissed the new bid as an unworkable "waste of time."
California-based US Aerospace, which reported a net loss of USD$14 million in 2009, signed a strategic partnership deal on Thursday with Antonov, maker of the world's largest cargo planes, according to a filing with the Securities and Exchange Commission.
The company told investors in May that it was in default on several notes and had an accumulated deficit of USD$28 million, which raised substantial concerns about its future unless it was able to secure additional debt and equity financing.
US Aerospace, formerly known as New Century Companies, said it told the US Defence Department on Thursday it planned to offer significantly lower prices than other bidders.
Boeing and Europe's EADS are already locked in a fierce battle for a contract for 179 refuelling planes to replace the ageing US fleet of Boeing-built KC-135 tankers, which are nearly 50 years old on average.
It was not immediately clear if the new team will be able to meet the Air Force's July 9 deadline for bids, especially since both Boeing and EADS had to meet several pre-submission deadlines to be allowed to submit their proposals.
The US Air Force had no immediate comment on the bid.
US Aerospace referred all calls to a company official and John Kirkland. Both men were travelling from Ukraine and could not be reached.
Kirkland, a Los Angeles-based attorney, had said he was involved in a tanker bid by United Aerospace, an aerospace consortium partly owned by the Russian government, in March that never materialised. UAC has denied involvement in any such bid.
Defence analyst Richard Aboulafia of the Teal Group said the bid was "a complete waste of time," citing concerns about the company's finances, security matters, maintenance, and its offering of a military cargo plane with high wings, unlike the commercial type, lower-wing plane sought by the Air Force.
"The idea of buying a fleet of Russian planes with dubious production plans and miserable maintenance plans is just beyond impossible," Aboulafia said.
US Aerospace said the team also planned to bid for other US military contracts and sell Antonov aircraft, products and services in the United States.
It expects to bid three different models, the AN-124-KC, AN-122-KC and AN-112-KC, which would be built by Antonov in Ukraine, with final assembly in the United States.
"We believe that we will be able to offer a superior aircraft at a significantly lower price than other potential bidders," the company said in a statement.
EADS and Boeing declined to comment on the news.
The Air Force's first attempt to replace its refuelling tankers, a lease-purchase deal with Boeing that began in late 2001, was scrapped amid a major procurement scandal that sent two former Boeing officials, one of whom was a former Air Force weapons buyer, to prison for ethics violations.
The second attempt resulted in a contract to EADS and its partner at the time, Northrop Grumman, but the deal was cancelled after government auditors upheld a Boeing protest. Northrop dropped out of the competition in March.
In March, responding to a possible Russian bid, Pentagon press secretary Geoff Morrell said the Defence Department planned a fair and open competition and would welcome all qualified bidders.
US Aerospace describes itself as an "emerging world class supplier" of structural airframe machined components and assemblies for US commercial and military suppliers.
On its website, it said it provides components to the Pentagon, the Air Force and other US defence companies including Lockheed Martin, Boeing, and L-3 Communications. It said it supplies parts used on military aircraft such as the P-3 Orion, and wide-body commercial airliners such as the Boeing 747.
(Reuters)