Cost of Boeing's US Air Force contract could overrun: report

18th July 2011, Comments 0 comments

Five months after Boeing won a massive contract to supply air refuelling tankers to the US Air Force, the US giant fears the project may run over budget, Focus magazine reported Sunday.

The 4.9 billion-dollar (3.5 billion-euro) budget set for the first stage of the project, for the first four of 179 aircraft, was set to overrun, the magazine said, citing a Boeing spokesman.

The spokesman said that if the budget was indeed exceeded, which was expected to happen, Boeing would pick up the extra costs as per the contract.

The US Air Force expected the overrun to reach 300 million euros, the magazine added -- from a total contract value of 35 billion dollars.

The Boeing spokesman told Focus the company had made an "aggressive" offer to win the contract in the face of competition from European giant EADS.

Boeing is to deliver the first batch of 18 aircraft by 2017.

The company won the contract to replace a fleet of ageing Boeing aerial refuelling tankers after a long and bitter battle with EADS.

After two earlier decisions were annulled, the Defense Department on February 24 named Boeing the winner. Airbus parent European Aeronautic Defence and Space Company decided not to appeal the decision.

But a spokesman for EADS told Focus magazine: "If Boeing doesn't fulfill its contract at the agreed price, we are available."

© 2011 AFP

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