After nearly 30 years in production and with a new-generation replacement plane rolling out the hangar next door, Boeing's popular but aging 767 was nearing the end of its commercial life.
Until Thursday afternoon.
That’s when the Air Force crowned Boeing the winner of a $35 billion competition that could keep the venerable 767, its Everett production line and the dozens of vendors that supply it busy for another two decades.
The contract – a $3.5 billion deal for research and development and the first 18 767-based aerial tankers, and a later $30 billion follow-on contract for 161 more – was a major victory for Boeing and its supporters and for the Puget Sound area. That’s where much of the plane will be created.
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Boeing’s selection came as a stark surprise to pundits who had been predicting for months that Europe’s largest aerospace firm, EADS, would take the prize with a militarized version of its A-330 commercial jet.
That almost universal prediction had permeated the Washington psyche so much that even a local congressman, Jay Inslee, at first sent out a news release titled “Decision Will Not Stand” proclaiming that the Pentagon’s selection of EADS would be successfully appealed. Inslee quickly retracted the release.
The Air Force decision caught EADS backers equally off-balance. In Mobile, Ala., where EADS had promised to build a $600 million factory to assemble the EADS tanker, nearly every local politician of note in Alabama and Mobile from the governor to the mayor had gathered in a downtown convention center to hear the decision online and celebrate their victory.
When Air Force Secretary Michael Donley named Boeing the tanker contract winner, Alabama quickly regrouped to express its disappointment.
“I’m disappointed but not surprised,” said Sen. Richard Shelby. “Only Chicago politics could tip the scales in favor of Boeing’s inferior plane. EADS clearly offers the more capable aircraft. If this decision stands, our war fighters will not get the superior equipment they deserve.” Shelby is a Republican.
“This is certainly a disappointing turn of events, and we look forward to discussing with the Air Force how it arrived at this conclusion,” said EADS North America Chairman Ralph D. Crosby Jr.
Mobile’s Mayor Sam Jones was more positive about the award.
“We’ve got to respect the Air Force decision and move on, because further delay puts our military in jeopardy,” he said.
Meanwhile, in the Puget Sound area, news releases from politicians and labor leaders expressed jubilation at the Boeing decision.
“At a time when our economy is hurting and good-paying aerospace jobs are critical to our recovery, this decision is great news for the skilled workers of Everett and the thousands of suppliers across the country who will help build this critical tanker for our Air Force,” said Washington U.S. Sen. Patty Murray, a Democrat.
“This decision is consistent with the president’s own call to ‘out-innovate’ and ‘out-build’ the rest of the world,” she said.
“We are proud to be part of supply the Air Force and our war fighters the product they need and deserve,” said Tom McCarty, president of the Society of Professional Engineering Employees in Aerospace local, which represents engineers and technical workers at Boeing.
Inslee rallied from his faux pas. “We are overjoyed that the Air Force has chosen the best plane for the mission,” he said.
Aerospace analyst Richard Aboulafia said Boeing’s win was unexpected.
“This is a major surprise,” he said on a podcast hosted by AirInsight LLC. “It’s like the headline ‘Dewey Defeats Truman.’”
For Washington, according to Boeing, the tanker program will create or keep active some 11,000 jobs and inject $693 million annually into the economy. Some 70 suppliers in Washington provide parts or services for the 767 program.
The 767 tanker program could tighten the market for aerospace engineers here. Boeing in the next few years likely will be simultaneously designing two new versions of the 787, the 787-9 and 787-10, an updated 777 and a replacement for its bread-and-butter 737, the world’s best-selling jetliner.
Boeing recently overhauled the 767 assembly line, shrinking it to take up less room in Boeing’s Everett plant and reconfiguring it to make it more efficient. Boeing has kept the 767 program going since early in the last decade with the plant producing at a slow pace to keep the production line active and workers occupied. The commercial program recently produced its 1,000th 767. According to Boeing’s order book, just 52 767s remain to be built and delivered to commercial customers.
The 767 has been a beneficiary of Boeing’s delays with its replacement for the mid-sized, twin-engine aircraft, the 787 Dreamliner. That plane is now more than three years late for its first deliveries.
Although Boeing hasn’t said so specifically, analysts surmise it might have given unhappy 787 customers bargains for new 767s to fill holes in their fleets until 787’s tardy arrival.
The 767 production could continue for years even beyond the end of the contract awarded today. The Air Force might need more tankers beyond the 179 in this procurement, and foreign customers might order versions for their air forces.
John Gillie: 253-597-8663 email@example.com