ArmoredD.com

By Andrew Chuter

Published: 27 Mar 13:11 EDT (09:11 GMT)

Source: Defense News

LONDON - The Royal Air Force is to get a fleet of Airbus in-flight refueling tanker aircraft in a 13 billion pound ($26 billion) private finance initiative (PFI) signed by the Ministry of Defence and the AirTanker consortium.

More than four years of negotiations between the AirTanker consortium, led by Airbus parent EADS, and the MoD over terms have finally been completed with a service contract allowing the RAF to have the use of up to 14 converted A330 airliners for tanking and passenger transport duties.

The first of the aircraft will enter service in 2011 to replace the RAF’s aging fleet of VC-10 and Tristar tanker/transports.

The deal, set to run for 27 years, is reckoned to be the largest defense public-private partnership yet undertaken.

Under the arrangement, the AirTanker consortium will own the aircraft and be responsible for training and maintenance, with the RAF effectively leasing the assets as required.

AirTanker will provide the infrastructure at the A330’s operating base at RAF Brize Norton, Oxfordshire, including the hangar, training, maintenance, flight operations’ fleet management and ground services.

Announcing the deal, defense procurement minister Baroness Taylor said the A330 would provide the RAF with a state-of-the-art tanker and passenger aircraft supporting air operations around the world.

“Achieving a satisfactory outcome to this complex, high-value, PFI deal has been challenging, particularly given the factors currently affecting the financial markets,” Taylor said.

Some 2.2 billion pounds of the capital required by AirTanker to undertake construction of the aircraft and other assets had to be funded by debt when plans to raise the cash via a bond fell victim to the recent credit crunch. AirTanker shareholders provided about a further 200 million pounds.

AirTanker boss Phil Blundell said closing the deal had been a challenge in the face of turmoil in the financial market.

EADS is the leading AirTanker shareholder in a consortium which also includes Cobham, Rolls-Royce, Thales UK and the VT Group.

The RAF is expected to require a core fleet of about eight aircraft with the remainder available to meet surge requirements.

AirTanker plans to lease the A330s for civil transport when the aircraft are not required by the military.

Blundell said he hoped that all the aircraft eventually would be fully employed by the RAF.

Aircraft leased into the civil market can be returned to the RAF in a maximum of 30 days, or sooner in an emergency. Conversion back to military standards, including the fitting of under wing refueling pods, can be achieved in a matter of hours.

AirTanker was selected to negotiate with the MoD in January 2004, beating a Boeing-backed bid offering second-hand British Airways 767s.

Since then, the A330 has gone on to win a string of air tanking contests against Boeing, culminating in the U.S. Air Force decision to acquire the aircraft for its own in-flight refueling requirements. Boeing is contesting the award.