Airbus pulls out of Japan military tanker aircraft deal

Airbus said on Tuesday its defense division would not bid for a Japanese air-to-air refueling tanker aircraft deal estimated to be worth over a billion dollars because the terms of the tender favored its U.S. rival Boeing.

Japan's government had said in June that it wants four tankers to supplement its existing four Boeing 767-based tankers. On Tuesday, a Japanese Ministry of Defense spokeswoman confirmed that a request for proposals (RFP) has been issued, but was unable to provide any other details or respond to the Airbus decision.

In a statement, Airbus said the RFP allowed Japan to buy tankers under the U.S. government's foreign military sale mechanism, which involves the two governments negotiating the contract directly.

This mechanism, Airbus said, did not allow for a fair price comparison between its A330-based multi-role tanker transport or MRTT and similar offerings from rival firms.

"Airbus Defense and Space regrets that the way in which this RFP has been formulated has forced it to conclude that it would be an inappropriate use of shareholders' funds and company resources to bid on this contract and accordingly the company will not be competing," the company added.

Boeing deferred comment on the matter to the U.S. government and the Japanese defense ministry.

Japan and Italy are the only two countries that currently use Boeing's latest 767-based refueling planes. The US Air Force plans to spend $52 billion (33.79 billion pounds) to develop and buy 179 of these tankers, which will replace its current fleet of KC-135 tankers.

Airbus has been chosen to supply around 60 A330 MRTT tankers to about 10 countries including Britain, Australia, Saudi Arabia and Singapore, with 24 tankers already in service.

In June, South Korea ordered four A330 MRTT tankers worth $1 billion.

(Siva Govindasamy - Reuters)