UPDATE 1-EADS triggers $50 billion U.S. tanker battle

* EADS enters fight against Boeing for tanker deal – sources

* Analysts say faces uphill financial, political struggle

By Andrea Shalal-Esa and Tim Hepher

WASHINGTON/PARIS, April 20 (BestGrowthStock) – Airbus parent EADS
(EAD.PA: ) braved awkward financial odds and a growing storm in
Congress by challenging Boeing (BA.N: ) for a military refuelling
plane deal worth up to $50 billion, sources said on Tuesday.

The decision to re-enter the contest after seeing an earlier
victory quashed on appeal, reported by Reuters on Monday, ends a
phoney war over its ambitions that saw the support of potential
allies waver and critics advise the European firm to keep out.

A source familiar with the matter said EADS had informed the
Pentagon earlier on Tuesday that it would compete for the aerial
tanker contract.

EADS North America confirmed it would make an announcement
on the competition at 1800 GMT, without giving further details.

An EADS decision to bid is certain to trigger a politically
charged campaign over jobs and transatlantic competition ahead
of Congressional elections in November, with a final decision on
the choice of plane due shortly before Americans vote.

Boeing and Airbus are locked in a row over civil subsidies.

Norm Dicks, chairman of the House of Representatives Defense
Appropriations panel, said last week he hoped EADS would not
launch a bid.

On Monday Republican Senator Jeff Sessions accused Dicks, a
Democratic congressman from the big Boeing state of Washington,
of trying to intimidate EADS’ would-be partners.

“There are going to be a large number of obstacles that will
be faced,” said Howard Wheeldon, senior strategist at BGC
Partners in London.

The Pentagon has given EADS until May 10 to signal whether
it plans to bid for the work and July 10 to file a full bid.

Sources close to the matter, who were not authorised to
speak publicly, told Reuters on Monday that EADS would bid alone
for the contract after failing to secure a key supplier.

EADS will still be backed by a big team of suppliers
including engine maker General Electric (GE.N: ), Honeywell
International (HON.N: ) and Rockwell Collins (COL.N: ) to name a
few, said the sources, who asked not to be named.

But the team will not include — at least for now — a U.S.
company that would have done classified work on the A330-based
tanker and helped to manage the huge program, they said.


Analysts said EADS faces a tough battle by offering the A330
against the smaller 767 plane being offered by Boeing.

“I think there is next to no chance that EADS can win the
tanker competition as it stands today,” said Macquarie
Securities analyst Rob Stallard.

“The request for proposals (RFP) clearly favours the 767,
and Boeing has put significant political capital into securing
this win. What EADS can get out of the competition is the
goodwill of the Department of Defense” he added.

Boeing was not available to comment.

EADS won a previous competition against Boeing in 2008 in a
bidding team led by Northrop Grumman (NOC.N: ), which would have
converted Airbus jets and crammed them with combat electronics.

The award was later overturned on appeal from Boeing.
Northrop last month pulled out of a rematch, saying revised
rules favoured Boeing – a charge both Boeing and buyers deny.

In a dash to stay inthe race, EADS held talks with L-3 and
Raytheon (RTN.N: ), as well as others, over the possibilty of
their supporting a bid to be led this time by EADS itself.

But the European company was forced into yet another rethink
when front-runner L-3 cooled on the deal.

Stock Market Report

(Editing by David Cowell)

UPDATE 1-EADS triggers $50 billion U.S. tanker battle