Boeing plea may unlock tanker deal

AN AGREEMENT by former Boeing chief financial officer Michael Sears to plead guilty to conspiring to deceive the US government about negotiations for a contract to provide the Air Force with refuelling tankers, could be the breakthrough the company is looking for to unlock the stalled $23.5bn (£12.8bn) deal.

The deal to lease an initial 100 modified 767 air refuelling tankers has been put on hold over allegations that the military procurement officer involved was working for Boeing when it was struck.

According to Bloomberg news agency, Sears has admitted that he worked with Pentagon official Darleen Druyen.

Druyen, who admits being offered a job by Boeing while working for Air Force procurement, has pleaded guilty to one count of conspiracy and is expected to be sentenced next week.

A Boeing spokesman, John Dern, said the company had always cooperated with the government over the affair.

'It was Boeing that first uncovered the facts associated with this investigation. The company took swift action, which included dismissing Mr Sears and simultaneously notifying the US attorney, and since that time the company has been co-operating in the US Attorney's investigation,' he said.

The development follows closely on statements by Boeing's defence division chief Jim Albaugh, who said he thought a deal would ultimately go ahead, although it would be subject to renegotiation.

Defence Secretary Donald Rumsfeldput the lease plan on hold and Albaugh believes it could revert to a straightforward purchase.

'My guess is when all's said and done - and I'm speculating here - it'll probably be a buy,' Albaugh said in an interview during the Farnborough air show.

'Yeah, and I think there will have to be a lot of renegotiations.'

The developments come at a time when some congressmen and US military officials are pressuring President Bush not to allow Boeing's arch-rival Airbus into the bidding.

Airbus's parent, Eads, has repeatedly said it is ready to compete for the project.

The Bush administration, has also sided with Boeing and says it is ready to get tough over European governments' subsidised loans to Eads.

Senior US trade officials have put the EU on notice that it will push for renegotiation a 12-yearold deal allowing Airbus to borrow government money on favourable terms to develop new aircraft.

In such a climate, the military is unlikely to award the tanker deal to Airbus. While there is a tentative offer from Lockheed-Martin, if Airbus were eliminated from the running, Boeing would remain frontrunner.