Mergers, Acquisitions, Alliances and Synergies Case Study

Case Title:

Boeing vs Northrop Grumman-Airbus Bid for USAF: Is it a Battle over Refuelling Tankers?

Abstract:

In March 2007, Boeing and an alliance of US’ Northrop Grumman and Europe’s Airbus bid to secure a $40 billion contract to replace United States Air Forces’ (USAF) air refuelling tankers. The bid raised various concerns which included sentiments like US taxpayer’s money flowing to Airbus, arming it to compete more aggressively with Boeing in the US and other commercial airplane markets. American political supporters of Airbus, mostly from the state of Alabama, where Airbus had promised to build two aircraft manufacturing plants, said that the Airbus’ tanker aircrafts should be encouraged since an international competitor would bring more value to the bid. Anticipating that Airbus would bring more jobs and expertise to the state, the state extended incentive support to Airbus

Observers felt that the fight for the total bid between Boeing and Airbus is much more complex than supplying the refuelling tankers.

Pedagogical Objectives:

• To analyse Boeing as a national pride of US
• To analyse the role of governments in defense bidding
• To analyse issues like national sentiments on foreign participation in defense deals.

Keywords :  Refuelling Tanker Bid for US Air Force; Boeing KC 767; Airbus KC 30 MRTT; Northrop Grumman; EADS North America; Mergers,Acquisitions,Alliances Case Study; KC 135 Stratotanker; Druyun Scandal on Tanker Procurement; Boom and Receptacle Fuelling; Hose and Drogue Fuelling; Launch Aid; USAF’s Request for Proposals; Load and Fuel carrying capability of Tankers; Incentive Funds; Lobbying in US Defense Contracts; Airbus’ Plants in Alabama