Lockheed Martin Exits U.S. Air Force Tanker Bid, Boosting Boeing’s KC-46 Program

Lockheed Martin, a leading defense contractor, has decided to bow out of the U.S. Air Force’s competition to produce at least 75 refueling tankers. The news, which came to light on October 23rd via a Reuters report, was later confirmed by a statement from a company representative.

In a direct statement on the matter, Lockheed’s spokesperson Stephanie Stinn remarked, “Lockheed Martin has chosen not to respond to the U.S. Air Force’s KC-135 fleet recapitalization Request for Information.”

The U.S. Air Force’s ambitious plan entails the replacement of their extensive fleet of KC-135 tankers, a model that dates back to the Eisenhower era. The process is segmented into three parts or lots. The initial batch was secured by Boeing for their KC-46 Pegasus model. However, the aircraft has been under scrutiny due to various performance-related issues. Key among these challenges are flaws in its onboard video system and problems with the boom that facilitates the connection between the tanker and aircraft in need of refueling.

With Lockheed Martin stepping aside, Boeing could potentially find itself in a more favorable position to secure the substantial KC-46 Pegasus refueling tanker contract. This development might consolidate Boeing’s stance in this crucial Air Force project.

Despite Lockheed’s exit from the bid, its stock experienced a 1.2% increase on Monday morning. In contrast, Boeing’s stock performance remained relatively static, and the broader Standard & Poor’s 500 stock index (SP500) observed a marginal increase of 0.2%.

The current development puts the ball in the court of European aircraft manufacturer Airbus, Lockheed’s initial partner in the tanker bidding. The European firm must now deliberate whether to proceed independently in pursuit of the Air Force contract.

The Airbus A330 Multi Role Tanker Transport is a European aerial refuelling and military transport aircraft based on the civilian Airbus A330. A total of 16 countries have placed firm orders for approximately 68 aircraft, of which 51 had been delivered by 30 November 2020.

It’s worth noting that, in 2018, Airbus intended to present its A330 multi-role tanker transport for the contract, a move stemming from its alliance with Lockheed.

The Airbus A330 MRTT is a military derivative of the A330-200 airliner. It is designed as a dual-role air-to-air refuelling and transport aircraft. For air-to-air refuelling missions, the A330 MRTT can be equipped with a combination of military systems.

The unfolding situation draws attention to the highly competitive nature of defense contracts and highlights the strategic decisions companies must make in such high-stakes scenarios.

Sources: AirGuide Business airguide.info, airbus.com, seekingalpha.com, reuters.com