Russian company will bid on Air Force tanker

Russia’s government-owned aerospace company United Aircraft will announce Monday it is competing against Boeing for the $40 billion refueling tanker contract, a Los Angeles attorney for the company said Friday. Here’s the latest twist in the Air Force tanker saga: The Russians are coming. Russia’s government-owned aerospace company will announce Monday it is competing against Boeing for the $40 billion refueling tanker contract, a Los Angeles attorney for the company said Friday. United Aircraft of Moscow plans to unveil a U.S. partner and offer a modified version of its Ilyushin-96 wide-body plane, John Kirkland, head of the corporate securities practice at Luce Forward, said in an interview. The still-unidentified partner, “a U.S. public company and existing defense contractor,” would assemble the planes in the U.S., he said. The Russian interest in the tanker bid was first reported Friday by The Wall Street Journal. United Aircraft was formed under the authority of then-President Vladimir Putin in 2006 to combine some of the most famous names in Russian aviation: Sukhoi, Tupolev, Ilyushin, MiG. Kirkland acknowledged it faces “significant hurdles … there are obvious security issues, there are sanctions and restrictions on buying things from Russia.” He insisted, however, that “the IL-96 meets every single one of the final RFP (request for proposal) requirements, and it comes in at a lower price (than Boeing), so if it’s a fair competition, we win.” One leading U.S. aerospace analyst thinks otherwise. “What a completely bizarre idea,” said Richard Aboulafia of the Teal Group. “There would be enormous political, technical and performance barriers. It will not happen.” For one thing, he said, “The Il-96’s operating economics have more in common with the KC-135’s than with the Airbus and Boeing jets scheduled to replace the KC-135’s.” Kirkland said that might be true of the current IL-96, which uses four engines. But United Aircraft will pitch a tanker using two modern, fuel-efficient Western engines, he said. “That’s a great idea, if the Air Force enjoys taking on much more risk and if they delay the program a few years,” Aboulafia responded. “Just when I thought (the tanker competition) couldn’t get any dumber this comes along,” he added. On another front in the tanker contest, European manufacturer EADS said Friday it was asking the Pentagon for a 90-day extension of the bidding deadline so it can decide whether to proceed without its partner Northrop Grumman. Northrop was slated to assemble EADS’s Airbus A330 tankers in a new plant in Mobile, Ala., but dropped out last month, saying the contract was tilted in Boeing’s favor because it emphasized price over additional capabilities. Kirkland said that “if Airbus doesn’t bid, we’ll step into their shoes” and consider using the Mobile, Ala., site. The Ilyushin 96 first flew in 1988 as the Soviet Union began to crumble. Only 20 were sold before the passenger version was discontinued amid economic chaos at home and little interest abroad. Russian civilian aircraft, to the extent they are known in the West, are often considered lumbering and unreliable. But Kirkland said they are sturdy and hold up well in combat conditions, noting they have ferried U.S. troops into Afghanistan. United Aircraft makes the current refueling tanker for Russia’s air forces, based on the Ulyushin 76 airliner, and would convert its newer airliner in similar fashion, he said. He attributed the mechanical problems of Russian airliners to lack of access to proper maintenance and training — something that could be corrected if United Aircraft can establish a maintenance, repair and overhaul base (MRO) in the U.S., he said. “The whole economic incentive to do this transaction is we will have an MRO facility in the U.S., to allow us to service Russian airplanes to eliminate the maintenance problems people experience with Russian airplanes.” That in turn would open the door for United Aircraft to market its Antonov AN148 regional jet, for up to about 85 passengers, in the U.S. market. “Its Putin’s favorite plane,” Kirkland said, adding that because of the AN148’s low price, “Everyone should want it, they’re just worried about the maintenance.” He said his Russian clients told him that when President Obama met Putin, the Russian president specifically asked about United Aircraft’s potential bid on the tanker. “Obama gave him his personal assurance they would be given a fair shot at this like everyone else,” he said.

 By Rami Grunbaum Seattle Times deputy business editor: or 206-464-8541

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