Airbus joins forces with Lockheed for U.S. tanker refuelling

By Andrea Shalal

BERLIN (Reuters) - Airbus and Lockheed Martin said on Tuesday they are teaming up to meet a growing demand for aerial refuelling from the U.S. Air Force, nearly eight years after the European planemaker lost an initial battle with Boeing .

The deal marks the first major foray by Airbus into the huge U.S. military market since its failed 2012 bid to merge with Britain's BAE Systems and its large U.S. business.

It also promises a sequel to an epic battle between the world's largest planemakers, that saw two former Boeing executives sent to federal prison for ethics violations.

Demand for tankers, which refuel combat aircraft during exercises or missions, has grown as armed forces stage more longer-range operations around the world.

The U.S. Air Force, which wants to ultimately replace its entire fleet of more than 400 tankers, is looking to meet growing demand for aerial refuelling with possible fee-for-service arrangements, purchases of hundreds of additional aircraft, and the future development of a stealthy tanker.

Senior Airbus and Lockheed executives have agreed to explore all these opportunities, but are still working on details of their future cooperation, sources familiar with the matter said.

BACKBONE OF MOBILITY

Airbus, which previously worked with Northrop Grumman Corp , won a $35 billion contract in 2008 to build its MRTT tankers for the U.S. Air Force.

But the deal was overturned amid political pressure and the U.S. Air Force re-ran the competition, which Boeing ultimately won, landing a $49 billion contract in 2011 to build 179 of its 767-based tankers.

Boeing had hoped this would lead to further orders but it has struggled with the KC-46A programme, missing deadlines and racking up some $3 billion in additional costs.

Todd Blecher, a Boeing spokesman, told Reuters it is working with the U.S. Air Force to deliver the first tanker before the end of the year and the new aircraft would be "the backbone of global mobility for generations to come".

But Airbus and Lockheed now hope to win orders for the A330-based Multi Role Tanker Transport (MRTT), and eventually design work on a next-generation tanker.

"We will be well-positioned to provide the United States Air Force with the advanced refuelling solutions needed to meet 21st century security challenges," Lockheed Chief Executive Marillyn Hewson said in a statement.

Airbus is banking on the success of the MRTT, which has been selected by 12 countries, including Australia, Britain and South Korea and is already refuelling or capable of refuelling most major U.S. combat jets, including the F-35 fighter.

Lockheed, builder of the F-35 and the C-130J transport plane that can also be used as a tanker, will give Airbus a strong partner for future U.S. bids, the companies said.

(1 euro = $1.1351)

(Reporting by Andrea Shalal; editing by Thomas Seythal, Adrian Croft/Kirsten Donovan/Alexander Smith)