Reuters reports that EADS, the parent of Airbus, has suggested it may not bid for the $35 billion Air Force contract for airborne refueling tankers. Reuters quotes a senior EADS manager as saying, "We will only bid if we can be sure that we stand a fair chance." This threat mirrors the one that Boeing Inc. (NYSE: BA) made recently -- a threat that paid off for Boeing when the Secretary of Defense announced this week that the tanker competition would be canceled and rebid sometime after the November election.

This puts a French company as a player in this November's election. How so? Because one of the candidates, John McCain, is rooting for an EADS victory. That's because his former chief of finance, Tom Loeffler, is a lobbyist for EADS whose employees have contributed $14,000 to McCain's campaign. And those ties likely corrupted the previous bidding process that led the General Accounting Office (GAO) in June to report that the process was flawed -- leading to a rebid. It is too early to know whether EADS money will pay off in an election victory for McCain.

However, for Boeing, the news of EADS copying its tactic of threatening to withdraw its bid is the sincerest form of flattery. Meanwhile, Boeing's victory in getting the bid delayed could be a Pyrrhic one -- in other words it could win a short-term battle and lose the war as did "King Pyrrhus of Epirus, whose army suffered irreplaceable casualties in defeating the Romans at Heraclea in 280 BC and Asculum in 279 BC during the Pyrrhic War," according to Wikipedia.

Continue reading Will Airbus leave the $35 billion tanker to Boeing?

Will Airbus leave the $35 billion tanker to Boeing? originally appeared on BloggingStocks on Sat, 13 Sep 2008 08:56:00 EST. Please see our terms for use of feeds.