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Boeing shares fall on report it’s bowing out of military tanker bidding

Aug. 11, 2008 - Shares of Boeing Co. fell nearly two per cent on Monday after reports that the company is considering not bidding in the next round for the Pentagon's US$35-billion airborne refuelling tanker contract.


August 11, 2008
By Carey Fredericks

Aug. 11, 2008 – Shares of Boeing Co. fell nearly two per cent on
Monday after reports that the company is considering not bidding in
the next round for the Pentagon's US$35-billion airborne refuelling
tanker contract.

Chicago-based Boeing's shares fell $1.24 or 1.83 per cent to
US$66.62 in late morning trading.

Aviation Week reported Monday that the company is “strongly
considering'' not submitting a bid for the Air Force tanker after
the Pentagon issued new guidelines last week for the plane. The
report cited unnamed sources familiar with Boeing's internal
strategy.

Boeing's Capitol Hill supporters have complained that the new
rules favour Northrop's larger plane and give Boeing little time to
make any changes to its original proposal.

Boeing spokesman Dan Beck would not comment on the report, saying
the company does not talk about its internal discussions. He sai
Boeing submitted its reply Sunday to the draft request for proposal
the Pentagon put out last week and will meet tomorrow with Pentagon
officials to discuss the new guidelines.

Boeing lost the first round of bidding to rival Northrop Grumman
Corp. earlier this year, but the Government Accountability Office
later ruled that the Air Force had committed several errors in
awarding the contract. The Pentagon decided to reopen the bidding
and hopes to award a new contract by the end of the year.

The new request for proposal said the Pentagon will give
“additional value'' to a plane that can carry more fuel than is
required. Boeing's supporters, especially those from the company's
industrial base in Washington state, say that unfairly favours
Northrop's larger plane. George Behan, a spokesman for Norm Dicks,
D-Wash., said the timeline of the new contract award will make it
hard for Boeing to present a bigger plane.

Northrop made similar no-bid threats during the initial round of
bidding because of what they thought were unfavourable terms in the
Pentagon's guidelines.
Shares of Boeing have ranged between $60.77 and $107.15 over the
past 52 weeks.