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Allegations set to fuel conflict over air tankers

By Demetri Sevastopulo

Published: April 1 2008 19:30 | Last updated: April 1 2008 19:30

The accusations that senior EADS executives allegedly violated market rules are likely to feed criticism in the US Congress about the recent US air force decision to award EADS a $35bn deal to supply refuelling tankers.

Boeing has already challenged the air force decision with a protest to the Governmental Accounting Office, the oversight arm of Congress, which must issue its recommendation within 100 days. The air force has stated it would accept the GAO recommendation even though it would not be legally binding.

Most analysts expect the GAO to dismiss the protest because the air force, in announcing its decision last month, suggested EADS and Northrop had easily beaten Boeing, which has supplied the military with inflight refuelling tankers for five decades.

That would leave Congress as the only route for Boeing to get the deal blocked. Supportive lawmakers have already raised concerns that the air force has chosen the modified Airbus A330 that EADS would supply. Now, the French stock market regulator’s action is likely to add fuel to those criticisms.

Copyright The Financial Times Limited 2008

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