Lockheed (LMT) and Airbus Take Aim at Boeing (BA)

The globally renowned American aerospace, defense, security and advanced technologies company, Lockheed Martin, has announced teaming up with Airbus to compete for one of the most controversial Pentagon procurement battles in recent memory - hoping to dethrone Boeing as the dominant provider of U.S. military aerial-refueling tankers.

Lockheed and Airbus have also signed an agreement to jointly pitch Airbus' A330 Multi Role Tanker Transport (MRTT) to the Pentagon.

Jointly working with Northrop Grumman, in 2008, Airbus had won the $35 billion deal to build A330 tankers for the Air Force, but that deal never materialized as it was overturned owing to political pressure. Boeing had won a similar $49 billion deal in 2011, to supply 179 tankers based on the design for its 767-commercial jet.

However, in the years since, Boeing struggled to deliver those KC-46 refuelers on time and on budget, while at the same time Pentagon’s demand for refueling has increased.

Seeing this opportunity, Lockheed Martin and Airbus decided to join forces to try and reseize the defense contracts.

Boeing, in the recent times, has failed to meet the initial deadline to begin KC-46 deliveries by August 2017 and has taken nearly $3 billion in charges related to the program. In response, Air Force Secretary Heather Wilson issued a rare public rebuke of the company's defense business earlier this year.

Although Lockheed Martin and Airbus didn’t mention Boeing or the KC-46 in their press release formally announcing the collaboration, they mentioned putting focus on addressing any identified capacity shortfall.