Northrop CEO sees tanker-turnabout danger

By Jim Wolf

FARNBOROUGH (Reuters) - Northrop Grumman's chief executive predicted Monday dire diplomatic consequences if the U.S. Air Force's biggest-ever transatlantic deal were reversed for reasons perceived to be protectionist.

CEO Ronald Sugar voiced confidence that Northrop Grumman and Airbus parent EADS, its partner, would keep a contract they won over Boeing in February to start building 179 new planes to fuel others in midair.

"If it goes the other way because of protectionism and misinformed jingoism, I think that would be a devastating blow to the relationship with our most trusted allies," he said in an interview at the Farnborough International Airshow, an aviation jamboree held in alternate years here and in Paris.

U.S. Defense Secretary Robert Gates announced last week he was reopening bidding in line with a recommendation of the Government Accountability Office. Acting on a Boeing protest, it found the Air Force had made "significant errors" in how it conducted the procurement and its mistakes "could have affected the outcome of what was a close competition."

Sugar referred to the mistakes at issue as "minor procedural flaws" that could be easily remedied.

"What we did is we designed what we thought was absolutely the most capable tanker," he said. "Clearly it was. That's why it was selected. And now we have to work through the process of cleaning up the procedural flaws, which are not of our making."

(Reporting by Jim Wolf; editing by Sue Thomas)