Boeing CEO still confident on tanker deal

CHICAGO — Boeing Co. CEO Harry Stonecipher said Monday he remains confident the company will ultimately get an air-tanker contract from the government despite the formal demise in Congress last week of the previously approved $23 billion deal.

The previous contract was undercut by ethical concerns about the role of former Pentagon procurement official Darleen Druyun. Druyun was sentenced Oct. 1 to nine months in prison for lining up a job with Boeing while she was overseeing the contract review.

The defense legislation passed by Congress eliminates any possibility of Boeing leasing converted 767s to the Air Force as refueling tankers, a plan that drew criticism for its high government costs. But the government still might decide to buy Boeing tankers, and that option remains under review in the Defense Department.

Stonecipher said the company will be able to “find our way through this” and satisfy any lingering concerns in Congress.

“If there is a contract for tankers, as I feel quite confident, Boeing will get it,” he said on a conference call with reporters.

The Chicago-based aerospace company’s only serious competition for the contract would likely be from Europe’s Airbus, which is embroiled in a feud with Washington over government subsidies.

Stonecipher said he expects the Pentagon to make a final decision next May or June on whether to proceed on replacing the Air Force’s aging air-tanker fleet.

“We have a great tanker, and no one has ever said we didn’t,” he said. “The Air Force still needs tankers. The only lack of confidence I would have in this thing is if they decided ‘No, we don’t want to do it right now, we want to continue to repair the ones we have.’ That’s the only question in my mind.”

The chief executive denied any presidential election-year motivation behind the timing of the subsidy battle, which escalated last week when the United States filed a challenge with the World Trade Organization. He said Boeing spent two years researching the issue before going forward with its complaint that France-based Airbus gets unfair aid from European governments in launching new airplane programs.

The European Union has responded by formally protesting tax breaks for Boeing, mainly an estimated $3.2 billion in tax incentives from Washington state for production of the company’s planned 7E7 jet.

Regardless how the complaints are resolved, Stonecipher said: “The 7E7 program is going ahead. It was going ahead with or without the Washington state tax incentives.”

On another subject, he said the company is still reviewing bids for its commercial airplane plant in Wichita, Kan., and probably will make a decision on selling by the end of this year.

Boeing shares rose 16 cents to close at $50.26 Monday on the New York Stock Exchange. The stock is up about 35 percent from a year ago.