EADS says no decision yet on U.S. tanker bid

PARIS (BestGrowthStock) – Airbus parent EADS (EAD.PA: ) has not decided whether to challenge Boeing (BA.N: ) for a deal worth up to $50 billion to sell air tankers to the United States but would not do so at a loss, its chief executive said on Monday.

Louis Gallois said the European company was still talking to U.S. suppliers that could join it in bidding for the massive defense contract, which is up for grabs after an earlier decision to buy Airbus planes was quashed on appeal from Boeing.

EADS has been given extra time to decide whether to stay in the race after its former partner Northrop Grumman (NOC.N: ) pulled out on the grounds that the rules for the contest now favored Boeing (BA.N: ), a charge denied by Washington.

“We need to be convinced that we can make a competitive offer,” Gallois told France’s LCI television.

EADS has been invited to bid as lead contractor, taking over the senior role from Northrop, and is now looking for a supplier to handle sensitive defense work reserved for U.S. arms firms.

Gallois confirmed talks with potential suppliers including L-3 Communications (LLL.N: ) and Raytheon (RTN.N: ), among others he did not name. Sources close to the talks said the U.S. unit of BAE Systems (BAES.L: ) had been involved but was out of the race.

EADS executives discussed the issue on Friday and could make a decision this week, sources close to the talks said last week.

Boeing has complained about a decision to give EADS an extra 60 days to decide whether to make a new bid for the tanker contest, which is the latest step in a long-delayed procurement.

The talks come as EADS recovers from a multi-billion-dollar blowout on its Airbus A400M military airlifter, which resulted in a bailout from European governments and 4.2 billion euros of project losses announced by the group last month.

Gallois said there was “no question” of taking part in the tanker competition for purely strategic reasons to lose money.

Gallois said the offer of prime contractor status had given the company extra room for maneuver but that EADS was competing on price against Boeing’s smaller aircraft.

Boeing has promised to pitch a redesigned version of its 767 airliner and denies this is less capable than the Airbus A330.

Gallois said that in weighing up a possible bid EADS wanted to meet three conditions: that EADS must be given full scope as a prime contractor, find a suitable partner and be able to offer planes at a “reasonable” price without losing money on the deal.

A tape of his remarks was made available ahead of their scheduled transmission at 4:20 a.m. EDT (1820 GMT).

Stock Market Today

(Reporting by Tim Hepher; Editing by James Regan and Jon Loades-Carter)

EADS says no decision yet on U.S. tanker bid