The Nr Fairy
3rd Sep 2003, 13:34
Seen in a financial web site (Etrade, taken from CBS Marketwatch - thanks !) :
Boeing, Air Force face Congress over tanker
SAN FRANCISCO (CBS.MW) -- While most observers agree that the U.S. Air Force needs new fuel tankers, the fight over how to pay for the new planes takes center stage this week amid bigger questions about how to modernize the military.
The Air Force wants to lease 100 modified Boeing (BA, Trade) 767 jets for $16.6 billion. The Pentagon contends it can get the much-needed jets in service sooner with this first-of-its-kind leasing deal, a controversial approach that critics say adds billions to the price.
That argument will be front and center on Wednesday afternoon in Washington when representatives from the Air Force, Boeing and other oversight groups appear before the Senate Commerce Committee, chaired by the man who has become the public face of the program's detractors: Sen. John McCain, R-Ariz.
It's one of the last places where the program could stall.
McCain has publicly attacked the program as a corporate giveaway that wastes taxpayer money to benefit the world's largest aerospace company.
While Boeing says it would be happy with either a lease or a sale, the lease would help the company more quickly at a time when the airline industry is dealing with a historic downturn. That has not been lost on Boeing's political allies in states like Illinois and Washington.
For the Air Force, many of the 40-year old KC-135s are racking up the hours at a time when U.S. air power plays an increasingly important role in supporting ground troops who often operate far from major bases.
Even opponents of the deal, including many government watchdog groups, agree that the tanker fleet is getting old and needs some kind of an overhaul.
But veteran Washington watchers say that consensus means little because issues of transparency, accountability and oversight loom over the decision to lease, not buy, the jets.
"The confrontation on Capitol Hill this fall is going to occur over how best to proceed," said Lehman Bros. Washington analyst Kim Wallace.
On Wednesday, McCain and his committee will hear from Air Force Secretary James Roche, Neal Curtin of the General Accounting Office; the head of Boeing's 767 Air Force program, John Sams, Jr., and other budgetary and government research experts.
Then on Thursday morning, the Senate Armed Services Committee will bring in Roche, Curtin and other experts to testify. McCain is also on that panel, which is chaired by Sen. John Warner, R-Va.
Some aircraft remain in front-line service for decades. A favorite anecdote of many military aviation buffs is that many B-52s currently in service are older than the crews flying them.
But this could become more a question of politics than a debate over what to do with battle-worn hardware, critics contend. "There's less political fallout voting for it than there is voting against it," said Keith Ashdown of Taxpayers for Common Sense. His group's executive director, Steven Ellis, is set to testify against the leases on Wednesday.
Ashdown said that the group is optimistic that committee members will understand its perspective. "We are in as good as shape as we could be going into these hearings," he said.
But opponents still lack one key element: A viable alternative to the lease program.
Experienced Washington watchers say this is the beginning of a larger and more complicated debate on how the military spends money to modernize at a time when demographic changes make spending choices tougher throughout government.
"What this argument points to is a highly unresolved debate over transformation" of the U.S. military, Wallace said, with questions about the larger impact on the industrial complex and how Defense Department efficiency affects national security.
Boeing shareholders will closely watch the program's fate. The stock is up sharply this summer despite further gloom in the aviation industry. The company's growing defense portfolio is as important for investors as the ebb and flow of commercial jet deliveries.
"If they were to lose this, it would impact the stock negatively. If they win it, I don't think it's going to do too much," said Paul Nisbet, an analyst at JSA Research. "It depends on how much uncertainty is brewed in the interim."
Boeing, Air Force face Congress over tanker
SAN FRANCISCO (CBS.MW) -- While most observers agree that the U.S. Air Force needs new fuel tankers, the fight over how to pay for the new planes takes center stage this week amid bigger questions about how to modernize the military.
The Air Force wants to lease 100 modified Boeing (BA, Trade) 767 jets for $16.6 billion. The Pentagon contends it can get the much-needed jets in service sooner with this first-of-its-kind leasing deal, a controversial approach that critics say adds billions to the price.
That argument will be front and center on Wednesday afternoon in Washington when representatives from the Air Force, Boeing and other oversight groups appear before the Senate Commerce Committee, chaired by the man who has become the public face of the program's detractors: Sen. John McCain, R-Ariz.
It's one of the last places where the program could stall.
McCain has publicly attacked the program as a corporate giveaway that wastes taxpayer money to benefit the world's largest aerospace company.
While Boeing says it would be happy with either a lease or a sale, the lease would help the company more quickly at a time when the airline industry is dealing with a historic downturn. That has not been lost on Boeing's political allies in states like Illinois and Washington.
For the Air Force, many of the 40-year old KC-135s are racking up the hours at a time when U.S. air power plays an increasingly important role in supporting ground troops who often operate far from major bases.
Even opponents of the deal, including many government watchdog groups, agree that the tanker fleet is getting old and needs some kind of an overhaul.
But veteran Washington watchers say that consensus means little because issues of transparency, accountability and oversight loom over the decision to lease, not buy, the jets.
"The confrontation on Capitol Hill this fall is going to occur over how best to proceed," said Lehman Bros. Washington analyst Kim Wallace.
On Wednesday, McCain and his committee will hear from Air Force Secretary James Roche, Neal Curtin of the General Accounting Office; the head of Boeing's 767 Air Force program, John Sams, Jr., and other budgetary and government research experts.
Then on Thursday morning, the Senate Armed Services Committee will bring in Roche, Curtin and other experts to testify. McCain is also on that panel, which is chaired by Sen. John Warner, R-Va.
Some aircraft remain in front-line service for decades. A favorite anecdote of many military aviation buffs is that many B-52s currently in service are older than the crews flying them.
But this could become more a question of politics than a debate over what to do with battle-worn hardware, critics contend. "There's less political fallout voting for it than there is voting against it," said Keith Ashdown of Taxpayers for Common Sense. His group's executive director, Steven Ellis, is set to testify against the leases on Wednesday.
Ashdown said that the group is optimistic that committee members will understand its perspective. "We are in as good as shape as we could be going into these hearings," he said.
But opponents still lack one key element: A viable alternative to the lease program.
Experienced Washington watchers say this is the beginning of a larger and more complicated debate on how the military spends money to modernize at a time when demographic changes make spending choices tougher throughout government.
"What this argument points to is a highly unresolved debate over transformation" of the U.S. military, Wallace said, with questions about the larger impact on the industrial complex and how Defense Department efficiency affects national security.
Boeing shareholders will closely watch the program's fate. The stock is up sharply this summer despite further gloom in the aviation industry. The company's growing defense portfolio is as important for investors as the ebb and flow of commercial jet deliveries.
"If they were to lose this, it would impact the stock negatively. If they win it, I don't think it's going to do too much," said Paul Nisbet, an analyst at JSA Research. "It depends on how much uncertainty is brewed in the interim."