EADS North America confirms today that the cancellation of the KC-X tanker competition by the US Department of Defense (DOD) nixes the Airbus proposal to shift final assembly for A330-200 freighters to Mobile, Alabama.

The DOD decision immediately halted the second round of competition between the A330-200-based KC-30 offered by a Northrop Grumman/EADS team and the Boeing KC-767.

The order by Secretary of Defense Bob Gates also calls for the next administration, which enters office in late January, to launch a new competition.

The US Air Force originally selected the KC-30 in February, but the contract award was overturned after a review by the US Government Accountability Office (GAO) found gross errors in the USAF's evaluation process.

"As we've consistently maintained, the establishment of the A330 final assembly facility in Mobile, for both tankers and freighters, is predicated on the selection of the Northrop Grumman tanker and a subsequent contract to deliver aircraft. One is dependent on the other," an EADS North America spokesman told ATI, Flight's premium affiliate.

Last January, Airbus appeared to sweeten the Northrop/EADS offer by proposing to shift production for up 48 combined A330-based tankers and freighters to Mobile. The proposal was made contingent upon the Northrop/EADS team winning the KC-X contract to build up to 179 tankers.

At least 12-18 tankers would be purchased annually by the USAF, leaving production capacity to assemble between 30-36 commercial freighters in Mobile.

City officials in Alabama called a press conference today in which they vented frustration at the setback, but still remained hopeful about establishing Mobile as a major aerospace hub eventually.

"It's really just a sad situation for us," said Mobile Mayor Sam Jones. But he added: "Mobile will manufacture large widebody aircraft on this particular site."

Even despite the setback, Jones said he believes the global media interest in the tanker contract has put Mobile in the spotlight as a future player in the aerospace industry.

"We certainly want to build the KC-45 [tanker] here," Jones said. "We also want to build commercial aircraft here. We'll build helicopters here. For the most part it is one of the goals of this community to have an aerospace contract here to build planes."

Source: Air Transport Intelligence news