WASHINGTON, July 2 (Reuters) - U.S. Aerospace Inc, a small cash-strapped U.S. company, said it has joined forces with Antonov, the state-owned Ukrainian plane builder, to enter the hotly contested competition to build a new generation of aerial tankers for the U.S. military.
It’s the latest twist in a nearly decade-long, drama-filled saga likely to end with a government contract worth as much as $50 billion to the winning bidder. Bids are due by next Friday.
One analyst immediately dismissed the new bid as an unworkable "waste of time."
California-based U.S. Aerospace, which reported a net loss of $14 million in 2009, signed a strategic partnership deal on Thursday with Antonov, maker of the world’s largest cargo planes, according to a filing with the Securities and Exchange Commission.
The company told investors in May that it was in default on several notes and had an accumulated deficit of $28 million, which raised substantial concerns about its future unless it was able to secure additional debt and equity financing.
U.S. Aerospace, formerly known as New Century Companies Inc, said it told the U.S. Defense Department on Thursday it planned to offer significantly lower prices than other bidders.
The company’s shares were up 5 cents or 42 percent at 17 cents on Friday.
Boeing Co and Europe’s EADS are already locked in a fierce battle for a contract for 179 refueling planes to replace the aging U.S. fleet of Boeing-built KC-135 tankers, which are nearly 50 years old on average.
It was not immediately clear if the new team will be able to meet the Air Force’s July 9 deadline for bids, especially since both Boeing and EADS had to meet several pre-submission deadlines to be allowed to submit their proposals.
The U.S. Air Force had no immediate comment on the bid.
U.S. Aerospace referred all calls to a company official and John Kirkland. Both men were traveling from Ukraine and could not be reached.
Kirkland, a Los Angeles-based attorney, had said he was involved in a tanker bid by United Aerospace Corp, an aerospace consortium partly owned by the Russian government, in March that never materialized. UAC has denied involvement in any such bid.
Defense analyst Richard Aboulafia of the Teal Group said the bid was "a complete waste of time," citing concerns about the company’s finances, security matters, maintenance, and its offering of a military cargo plane with high wings, unlike the commercial type, lower-wing plane sought by the Air Force.
"The idea of buying a fleet of Russian planes with dubious production plans and miserable maintenance planes is just beyond impossible," Aboulafia said.
U.S. Aerospace said the team also planned to bid for other U.S. military contracts and sell Antonov aircraft, products and services in the United States.
It expects to bid three different models, the AN-124-KC, AN-122-KC and AN-112-KC, which would be built by Antonov in Ukraine, with final assembly in the United States.
"We believe that we will be able to offer a superior aircraft at a significantly lower price than other potential bidders," the company said in a statement.
EADS and Boeing declined to comment on the news.
The Air Force’s first attempt to replace its refueling tankers, a lease-purchase deal with Boeing that began in late 2001, was scrapped amid a major procurement scandal that sent two former Boeing officials, one of whom was a former Air Force weapons buyer, to prison for ethics violations.
The second attempt resulted in a contract to EADS and its partner at the time, Northrop Grumman Corp, but the deal was canceled after government auditors upheld a Boeing protest. Northrop dropped out of the competition in March.
In March, responding to a possible Russian bid, Pentagon press secretary Geoff Morrell said the Defense Department planned a fair and open competition and would welcome all qualified bidders.
U.S. Aerospace describes itself as an "emerging world class supplier" of structural airframe machined components and assemblies for U.S. commercial and military suppliers.
On its website, it said it provides components to the Pentagon, the Air Force and other U.S. defense companies including Lockheed Martin Corp, Boeing, and L-3 Communications Holdings. It said it supplies parts used on military aircraft such as the P-3 Orion, and wide-body commercial airliners such as the Boeing 747.
