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Aviation History
2002
2002 - 0558.PDF
HEADLINES DEFENCE PAUL LEWIS / WASHINGTON DC USAF to look at Euro tanker option US Department of Defense backs down on Boeing-only approach after tough rebuke from Congressional committee The US Air Force has issued EADS with a request for information (RFI) for its proposed Airbus A330-based in-flight refuelling tankers, in addi tion to soliciting similar data from Boeing on the 767. The move follows stinging US Congress criticism of US Depart ment of Defense plans to negotiate solely with the US manufacturer for a 100-tanker lease. The USAF says it sent the RFI to EADS as well as Boeing "to assess the company's ability to meet our DEFENCE Honeywell to restart T-55 production Honeywell is to put the T55 tur- boshaft engine back into production following the award of a contract potentially worth more than $1.1 billion. Mean while, the UK has awarded Honeywell an $80 million con tract for T55 support. The US Army has ordered T55-714s to replace -712 engines in its Boeing CH-47D Chinooks. With all options exer cised the deal will be worth $1.1 billion over eight years. The army operates nearly 450 CH-47s. Mike Redenbaugh, vice presi dent propulsion at Honeywell Engines, Systems & Services, says the upgraded engine gives "a 22% improvement in power, 7% better fuel economy and greater reliability". Improve ments include full authority digital engine control, corrosion resistant materials, and longer life compressor discs. Honeywell's five-year deal with the UK Ministry of Defence covers support of the T55- 712/714 engines on Royal Air Force Chinook HC2/2A/3s. The deal includes a strategic partnership with the MoD's Defence Aviation Repair Agency, which will repair, overhaul and test the engines. needs and time-line". But the EADS initiative has come after Senate Armed Services Committee mem ber John McCain criticised air force secretary James Roche, earlier this month, for authorising the USAF to discuss the lease only with Boeing. Roche defended the decision, saying cancellation of 767 orders post-11 September had created op portunities for a good deal. Airbus and EADS have also protested over the absence of competition, having worked for two years to position AIR TRANSPORT Airbus has salvaged Virgin Atlantic's vital A340-600 launch contract after agreeing to revised financial terms. The rescue of the $1.9 billion deal, the subject of intense talks for five months, ensures Virgin will be the first airline to receive the aircraft in June as originally contracted. Industry sources say Virgin has negotiated an extremely favourable deal involving manufacturer- arranged funding in excess of $1 billion, a partial deferral of deliver ies, and the return of some of the airline's existing A340s. However, the airline's decision to accept the Airbus offer is believed to have angered Virgin's 49% shareholder Singapore Airlines (SIA), which is deferring Airbus and Boeing orders. Virgin signed up as launch cus tomer for the Rolls-Royce Trent 500-powered widebody in 1997, with firm orders for 10 aircraft and eight options. But following the collapse in transatlantic traffic after 11 September, the airline entered talks with Airbus about deferring this year's deliveries. Having lost its other launch cus tomer Swissair following the air line's collapse, Airbus was deter mined to retain Virgin. An initial round of talks in November ended with Airbus's offer being rejected (Flight International, 4-10 December the A330 for the USAF's KC-X future tanker requirement. Airbus chief executive Noel Forgeard said last month the company would be able to undercut Boeing's reported $20 billion, 10-year lease proposal by up to 40%. EADS lacks a US partner to help promote the A330, and hopes of building on a relationship with Lockheed Martin based on an A320 Multimission Maritime Aircraft offering have evaporated after the US company pulled out of the deal 2001). According to sources, the airline's management was in favour of that deal, but it was rejected after pressure from SIA. Airbus tabled a revised offer meeting all Virgin's conditions, and this was accepted last week. It involves the delivery of the first four aircraft this year as scheduled, but they will be supplied on operat ing leases understood to have fixed- price purchase options. Airbus has also agreed to stretch out the six remaining orders to 2006, and arrange around $1 billion worth of financing through a loan. Virgin has also cancelled its eight options, and will return at least four of its 10 (see P7). While most insiders give EADS little chance of success, one observer says: "It will control the price Boeing wins, and put down a marker for next time." The USAF has established a tan ker programme office to talk with Boeing and EADS over the next six months. While the USAF has approval to negotiate a lease, it will still be required to return to Con gress to seek approval for any lease arrangement to ensure it is in the best interests of the US taxpayer. A340-300s to the manufacturer this summer, earlier than first planned. Virgin declines to comment on the financial aspects of the deal, but confirms it has cancelled its options, and will phase out some A340-300s as the -600s are delivered. While Virgin says that SIA "has been extremely supportive of our strategy since 11 September", the airline is believed to have told Virgin to push for even better terms. Meanwhile, Virgin is increasing capacity for the first time since the 11 September terrorist attacks on the USA, after a rise in load factors and bookings. Capacity, cut by 20%, will be increased by 5% overall. Virgin to be first A340-600 operator as Airbus brings deal back from brink Virgin will return A340-300s to Airbus this summer as part of the deal 6 26 FEBRUARY - 4 MARCH 2002 FLIGHT INTERNATIONAL www.flightinternational.com
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