Boeing delays Japan aerial tanker delivery again

By Andrea Shalal-Esa

WASHINGTON, Jan 29 (Reuters) - Boeing Co (BA.N: Quote, Profile, Research) said on Tuesday it would deliver two 767 aerial refueling tankers to Japan by the end of March at the latest after vowing last month to ship them by the end of January.

Another two 767 tankers will be delivered to Italy in the second quarter of 2008, two years later than planned, Boeing said.

The delays come in the final weeks of the U.S. Air Force's evaluation of rival bids by Boeing and Northrop Grumman Corp (NOC.N: Quote, Profile, Research) to win a $40 billion U.S. tanker contract. Air Force officials say past performance and proposal risk are significant factors in evaluating the bids.

The Air Force is expected to award a winner-takes-all contract sometime after a key Feb. 13 meeting of Pentagon officials.

The service's top uniformed acquisition official, Lt. Gen. Donald Hoffman, plans to discuss the tanker acquisition process and the Air Force's effort to be as transparent as possible with reporters on Feb. 15, the Air Force said. It stressed that no contract award was expected that day.

Boeing has acknowledged technical issues and delays on the Italian and Japanese tanker programs, and says it will apply lessons learned to help keep any U.S. orders on track.

In the case of Japan's planes, Boeing said it would deliver the tankers after successfully transferring fuel from a 767 tanker to a F-15E fighter jet at night, the first nighttime refueling ever accomplished using a 767.

Boeing must still complete remaining Federal Aviation Administration certifications to allow the tanker to carry passengers and cargo before Japan will accept the planes, said Boeing spokesman Bill Barksdale. The Japan deliveries would occur "by the end of the first quarter at the latest," he said. Initially, the planes were due by 2005.

Rival Northrop and its European partner EADS (EAD.PA: Quote, Profile, Research), which are offering a tanker based on the Airbus A330, have seized on the delays as evidence of risk with the Boeing proposal in the U.S. tanker contest.

Northrop argues that the nighttime refueling was done with a fifth-generation boom, not the newer version that Boeing has offered in the Air Force competition. That boom, said Northrop spokesman Randy Belote, has not yet been built or tested.

By contrast, he said EADS first transferred gas through its boom on the ground in December and had completed 160 hours of testing and 60 flight tests. EADS was preparing to pass fuel in the air "shortly," although Belote gave no exact date.

But Boeing argues that it is still ahead of the curve, since it will deliver its tankers before EADS.

A top Australian military official last week said his country was happy with work by EADS on its new Airbus A330 refueling tankers. Australia picked the EADS A330 Multi-Role Tanker Transport over Boeing's 767 tanker in 2004.

EADS will deliver the first of five Australian tankers in early 2009 as opposed to December 2008 due to changes requested by Australia, a source familiar with the program has said.

EADS has also won A330 tanker orders from the United Arab Emirates, Britain and Saudi Arabia.

(Reporting by Andrea Shalal-Esa, editing by Richard Chang)