Boeing lands $20bn tanker deal

The contract means jobs saved in Washington state

Aircraft maker Boeing has won a controversial contract to lease 100 tanker aircraft to the Pentagon.

Boeing, whose performance has suffered from the slump to hit the global aviation industry over the past three years, stands to earn almost $20bn - rather than the $21bn earlier thought to be the price tag - over the course of the contract.

The 100 Boeing 767s will be built and modified at Boeing's works in the north-western state of Washington, allowing the US Air Force to speed up the retirement of its current fleet of refuelling tankers, whose average age is 43.

Some in Congress have criticised the deal, including Arizona Republican Senator John McCain, who has called it a disguised handout to Boeing.

He and other opponents have repeatedly delayed the deal, in unhappiness at the decision to lease rather than buy the aircraft.

"It's a lousy deal for the Air Force and for the American taxpayer," Mr McCain said.

"In all my years in Congress, I have never seen the security and fiduciary responsibilities of the federal government quite so nakedly subordinated to the interests of one defense manufacturer."

Boeing shares were up more than 3% following the announcement.

Benefits all round?

But supporters have kept the plan alive, claiming that leasing allows the planes to come into service much earlier than otherwise would be possible.

Each aircraft costs $131m in leasing fees and another $7m on financing costs for a total of not far short of $16bn, with an option to buy them after six years for another $4bn.

The most vocal supporters were from Washington state itself, in the hope of keeping jobs at Boeing's plants there.

"We finally have a deal that will benefit Washington state, Boeing and above all -- the brave men and women of our Air Force," said Patty Murray, a Washington Democrat.

The agreement has finally been signed off just as the man responsible for it leaves government service.

Edward Aldridge, head of weapons procurement for the Pentagon, retires on Friday, immediately after a press conference to announce details of the Boeing deal.