Airbus and Boeing will likely split the Pentagon's $35 billion tanker deal


The Pentagon recently announced its third attempt to find a supplier willing to accept $35 billion in exchange for 179 airborne refueling tankers. If BusinessWeek's reporting proves prescient, that $35 billion will be divided in some way between the two bidders -- Boeing (BA) and EADS' Airbus subsidiary in partnership with Northrop Grumman (NOC).

Before getting into why the contact will likely end up being split, it's worth focusing on the regional politics involved. The Boeing work for the tanker would be done in Washington, Connecticut and Illinois. By contrast, the Airbus/Northrop Grumman tankers would be built in Alabama and South Carolina -- not to mention Europe. In short, the Democratic party wants Boeing to win, and the Republican party favors Airbus/Northrop.