EADS defends tanker deal as Boeing appeals

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"We have the feeling that the process was very transparent and fair and professional," Chief Executive Louis Gallois told a news conference.

PARIS (Reuters) - European aerospace group EADS <EAD.PA> defended a major contract to provide 179 aerial refueling tankers to the U.S. Air Force after defeated rival Boeing <BA.N> announced an appeal.

"We have the feeling that the process was very transparent and fair and professional," Chief Executive Louis Gallois told a news conference.

"It is not by chance that we won, having won the last five (international) competitions for tankers; that is all I can say," Gallois said.

Boeing said on Monday it would file a formal protest on Tuesday asking the U.S. Government Accountability Office to review the February 29 decision by the U.S. Air Force to award a $35 billion contract to build aerial refueling tankers to a team of Northrop Grumman Corp <NOC.N> and Airbus parent EADS.

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EADS referred questions on the legal status of Boeing's challenge to its senior partner Northrop Grumman.

Gallois declined to say how revenues or profits would be shared between EADS and Northrop, a sensitive issue for opponents of the deal in Congress.

Asked whether EADS would make money on the deal, Gallois said, "We are not selling airplanes at a loss and we want to make money on every contract we have."

EADS plans to assemble the airframes, based on A330-200 passenger jets, in Alabama before handing them over to partner Northrop Grumman for militarization.

It says 60 percent of the value of the planes will be added in the United States, creating 1,300 direct jobs and 25,000 jobs indirectly. Critics in Congress dispute the figures.

Gallois told analysts that 8-10 percent of the value of an aircraft was tied up in the basic assembly. He said EADS would handle foreign exchange risk on the "green airframes" or basic structures in the normal commercial way.

EADS Finance Director Hans Peter Ring said revenues would come in the next decade rather than in the immediate future.

Ring also said a contract known as FSTA to complete the financing of a sale of tankers to Britain under a private finance initiative would be completed within weeks.

Gallois reaffirmed plans to seek a mid-sized defense, security or services firm in the United States but declined to give a timetable.

Gallois has told staff that EADS will propose two acquisitions to the board in 2008 including at least one in the United States, according to a memo obtained by Reuters on Sunday.

"The U.S. is half of the world defense market and we can't be a big actor in world defense if we are not in the U.S.," Gallois told analysts in a conference call.