Boeing Bows Out Of Contentious Air Refueling Tanker Contract Bid

August 11, 2008 2:31 p.m. EST

Washington, D.C. (AHN) - Shares of Boeing Co. dropped on Monday after the U.S. aerospace giant is "strongly considering" not to bid in the next round of the U.S. Air Force refueling tanker competition.

The company was responding to the Pentagon's Aug. 6 release, which was a revised terms for a request for proposals (RFP), for a $35 billion contract to manufacture a new generation of air refueling tankers.

The reports suggest that the new terms for the plane were in favor of the rival Northrop Grumman Corp., which have larger plane and Boeing will have no time to revise its proposal.

"Company officials are strongly considering the option of not submitting a proposal as the company's Integrated Defense Systems sector tries to respond to the draft RFP within the government's speedy timeline," Aviation Week reported citing "multiple" sources familiar with Boeing's internal discussions.

According to the contract, the Defense Department presented an offer to produce 179 aircraft, which is the first phase of a fleet replacement project worth as much as $100 billion over the period of 30 years.

Shares of the Chicago-based Boeing declined by around 2 percent in the late morning trading session as it moved down by 1.67 percent or $1.13 to $66.73.