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Airbus, Lockheed join forces to pursue U.S. military refueling orders

Reuters  |  BERLIN 

By Andrea Shalal

BERLIN (Reuters) - Europe's is teaming up with a new U.S. partner, Lockheed Martin, to try to crack the air tanker market nearly eight years after losing out to rival in a bitter battle to supply refueling planes to the

and Lockheed, the biggest U.S. arms maker, said on Tuesday they had signed an agreement to meet the growing demand for aerial refueling for the

The agreement marks Airbus's first major foray into the huge market since its failed 2012 bid to merge with Britain's and its large U.S. unit.

It kicks off a rerun of an epic battle between and Boeing, the world largest planemakers, that stretched for nearly a decade and saw two former executives sent to federal prison for ethics violations.

Airbus, previously teamed with U.S. Northrop Grumman Corp, in 2008 had won a $35 billion contract to build its MRTT aerial refuelling tankers for the U.S. Air Force, only to see the deal overturned amid political pressure.

The re-ran the competition and ultimately won a $49 billion contract in 2011 to build 179 767-based tankers for the U.S. Air Force, but it has missed deadlines on the resulting programme and piled up some $3 billion in costs.

Now Airbus will work with Lockheed and go after the next possible aircraft and refuelling service orders.

"By combining the innovation and expertise of Airbus and Lockheed Martin, we will be well-positioned to provide the Air Force with the advanced refueling solutions needed to meet 21st century security challenges," said Lockheed in a statement.

Outgoing Airbus said the two firms made "a great industry team."

Militaries rely on tankers - which are essentially flying - to extend their reach by refueling combat aircraft during military exercises or military missions. Demand has grown given the large number of longer-range military operations underway around the world.

Airbus is banking on the international success of its A330-based Multi Role Tanker Transport (MRTT), which has been selected by 12 countries, including Australia, Britain and The aircraft is already refuelling or capable of refuelling most major U.S. combat airplanes, including the stealthy fighter jet.

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

"This is a great opportunity for our two companies to combine our expertise," said Michele Evans, the new of Lockheed's aeronautics division.

The U.S. Air Force, which wants to ultimately replace its entire fleet of over 400 tankers, is examining ways 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 executives from Airbus and Lockheed agreed in to jointly explore all those opportunities, but are still working on details of their future cooperation, according to sources familiar with the matter.

(1 euro = $1.1351)

(Reporting by Andrea Shalal; editing by Thomas Seythal, Adrian Croft and Kirsten Donovan)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 04 2018. 19:15 IST