Funding Deal Proposed on Tankers for Air Force

An influential Senate committee proposed a compromise deal late Thursday that could clear the way for the Air Force to acquire 100 aerial refueling tankers from Boeing Co.

In a deal that could finally end a contentious battle, two key Senate leaders proposed having the Air Force lease 20 aircraft, then buy the remainder for a total cost of $16.9 billion.

The compromise would save about $4 billion over the original proposal to lease and then buy 100 Boeing 767s for about $21 billion, they said.

A spokesman for Chicago-based Boeing declined to comment. But a source at the company said the new proposal would not change the potential profit from the deal.

The Air Force’s aerial tankers are aging -- some are more than 40 years old -- and the Pentagon, saying it needs to begin replacing them as soon as possible, has argued that the lease plan was the best way to do so.

But watchdog groups as well as Sen. John McCain (R-Ariz.) criticized the original plan as too costly and accused the Pentagon of attempting to bail out an ailing company. Boeing, amid one of the worst travel slumps in decades, has been struggling to sell commercial passenger jets. The tankers would be newly built 767 jetliners that would be converted for refueling military aircraft.

Sen. John W. Warner (R-Va.), chairman of the Senate Armed Services Committee, and colleague Carl Levin (D-Mich.) jointly announced the proposal Thursday. The measure will be submitted to three other House and Senate committees for consideration next week.

Some taxpayer groups that had been harshly critical of the original plan lauded the latest proposal. “This is the best compromise anyone is going to get,” said Keith Ashdown, vice president of policy for Taxpayers for Common Sense.

McCain, the chief critic of the lease plan, is “generally supportive,” an aide to the senator told Reuters news service.