Euro rival 'disappointed' at losing $35bn US air tanker deal to Boeing

The US Air Force contract is one of the biggest to date and will secure jobs in Washington state and Kansas.

But the decision to award the work to Chicago-based Boeing disappointed the European Aeronautic Defence and Space company (Eads) and Germany which had made a rival bid. They vowed to discuss the decision with the US military. Their disappointment was shared by workers in America's Gulf coast and Alabama, where Eads hoped to assemble its aircraft at a former military base in Mobile.

The contract to replace the 50-year-old KC-135 tanker fleet is a major boost for the Puget Sound region and Wichita, Kansas, where the planes will be built and modified. The announcement came as a surprise. Even company executives had expected Eads to win the decade-long battle with Boeing, marked by delays and acrimony.

"What we can tell you was that Boeing was a clear winner," deputy defence secretary William Lynn said.

Politicians from Alabama suggested politics played a role. "I'm disappointed but not surprised," Senator Richard Shelby said. "Only Chicago politics could tip the scales in favour of Boeing's inferior plane. Eads clearly offers the more capable aircraft."

Chicago is the political home of President Barack Obama, while his new chief of staff, William M Daley, resigned last month from the Boeing board where he had served since 2006. The White House said Mr Daley had no role in the decision.

Representative Jo Bonner vowed to get a full account of why Eads lost out. "This competition has been challenged before and it's not unlikely it will be challenged again," he said.

Mr Lynn said the losing bidder could appeal, but believed there was no grounds for protest.

Eads chairman in North America Ralph D Crosby Jnr said: "This is a disappointing turn of events, and we look forward to discussing with the USAF how it arrived at this conclusion."

The company said it was sending a letter to employees explaining the decision does not end Eads' efforts to expand in the US. German foreign minister Raider Bruederle said he felt that "Eads submitted a very good offer.We assume that the decision will now be analysed and that possible further steps and consequences will be considered in that." He did not elaborate.

German Chancellor Angela Merkel's spokesman, Steffen Seibert, said: "We have to take note with regret of this decision.From our German point of view, an opportunity also was missed here to deepen further the trans-Atlantic partnership."

He added that Ms Merkel saw "no need to act" at present.

The tankers, basically flying petrol stations, are crucial for the military, allowing jet fighters, supply planes and other aircraft to cover long distances. The last Boeing-built KC-135 was delivered in 1965, and the USAF is struggling to keep them flying.

The contract will support about 50,000 US jobs with Boeing and some 800 suppliers in more than 40 states, the company said. For Washington state alone, Boeing said it would mean 11,000 jobs and $693?million to the local economy each year.

Bungling and the conviction of a top defence department official have delayed a decision on the contract for years.

Initially, the air force planned to lease and buy Boeing planes to serve as tankers, but that fell through. It later awarded a contract to Northrop and Eads, but in 2008 the government watchdog upheld a Boeing protest, finding "a number of significant errors" in the decision, including its failure to judge fairly the relative merits of each proposal.

The Air Force reopened the bidding in 2010 only to be embarrassed again as it mistakenly gave Boeing and Eads sensitive information that contained each other's confidential bids.