EADS’ options slipping away on tanker bid

* EADS looking for partner after second bid setback

* Must declare bid for U.S. tanker deal by May 10

* EADS still in talks with possible partners – sources

* Shares up 1.19 pct

By Tim Hepher

PARIS, April 16 (BestGrowthStock) – Twice-jilted EADS (EAD.PA: ) faced
a dwindling set of options as the Airbus parent firm sought
without a much-needed partner on Friday to preserve its hopes of
bidding for a refuelling plane deal in the United States.

The European company has been left solo for the second time
in as many months as it ponders a politically charged bid to
challenge Boeing (BA.N: ) for an American defence deal worth up to
$50 billion, sources close to the matter said.

EADS executives met a week ago with advanced plans to launch
a bid with U.S. defence contractor L-3 Communications (LLL.N: ) as
its key supplier. But sources said the U.S. company had backed
away leaving a sombre mood in the European camp. [ID:nN15214199]

“Overnight they went from positive to more negative,” one
person familiar with the matter said, asking not to be named.

L-3 declined on Thursday to comment about the talks.

An EADS spokesman said it continued to examine its options
and declined further comment.

EADS shares were up 1.19 percent at 14.94 euros by 1300 GMT,
outperforming the European market (.STOXX: ).

EADS had been hunting for a partner after Northrop Grumman
(NOC.N: ) withdrew support last month. A U.S. partner is necessary
to install classified systems on Airbus A330 jetliners which
would be assembled and adapted for air tanker use in Alabama.

EADS and Northrop won a previous U.S. Air Force tanker
contest in 2008. The Pentagon cancelled the deal after
government auditors upheld a Boeing protest and launched a new
tender.

EADS must say by May 10 whether it intends to take part in
the contest. Only a handful of companies are seen as likely
partners and analysts said EADS faced the additional hurdle of
mounting pressure ahead of Congressional elections in November.

“Given that the United States is looking more inward, the
options for EADS are clearly running out,” said Howard Wheeldon,
senior strategist at BGC Partners in London.

“I am reluctant to say it is the end of the road, but I am
hard-pressed to find anyone else they can move in with as a
junior or equal partner.”

EADS officials are still in talks with some U.S. companies,
including possibly L-3 and Raytheon Co (RTN.N: ), although time
for sealing a pact is running out, according to several sources
who were not authorized to speak on the record.

INDUSTRIAL BASE

Some U.S. analysts have blamed EADS’s difficulties on a wider
dispute over aircraft subsidies and the size of its own plane.
It has been heavily criticised in Congress after the World Trade
Organisation (WTO) ruled it had received unfair civil jet
subsidies.

Airbus supporters argue the issues are not linked and claim
a preliminary confidential verdict on a European counter-suit at
the WTO, due in June, will be equally embarrassing for Boeing.

Norm Dicks, a Democrat congressman from Washington, where
Boeing would manufacture many of its tankers, said concerns over
the health of U.S. industry outweighed the benefits of
competition.

“Personally, I hope they don’t bid,” Dicks, chairman of the
House of Representatives Defense Appropriations subcommittee,
told reporters on Thursday.

“We’ve already had a competition. We know what their numbers
are. I think that their plane’s too big.”

When Northrop withdrew, it said the Pentagon’s rules for the
competition favoured Boeing’s smaller 767.

French President Nicolas Sarkozy said last month EADS would
bid for the plane contract if the rules were fair and President
Barack Obama said they would be both fair and transparent.

Defence sources said EADS had not given up on a bid but
Wheeldon said the tensions may have longer-term implications.

“Apart from (Britain’s) BAE Systems (BAES.L: ), transatlantic
consolidation led by Europe is now dead. There may still be some
doors open to transatlantic consolidation led by the U.S., but
not in the immediate future.”

Stocks

(Additional reporting by Andrea Shalal-Esa, Jim Wolf; Editing
by Sharon Lindores)

EADS’ options slipping away on tanker bid