Tanker Wars: CEO Pick Elicits Puzzled Response

The North American arm of European aerospace company EADS disclosed yesterday that chief executive officer Ralph Crosby would be succeeded by former NASA head Sean O’Keefe. Crosby will become non-executive chairman of the unit when O’Keefe takes over the CEO’s job on November 1. On paper, O’Keefe is exceptionally qualified. He served as Pentagon comptroller and acting Navy secretary during Dick Cheney’s tenure as defense secretary, and later as NASA administrator during President George W. Bush’s first term. He also has held important posts in academia and the corporate world, most recently heading up the Washington operations of General Electric’s aviation business.

But everything EADS does in Washington is viewed against the backdrop of a pending $40 billion competition to provide the Air Force with its next aerial-refueling tanker, because EADS is Northrop Grumman’s junior partner in that venture. Viewed from the perspective of that politically charged contest, the selection of a Dick Cheney protege to run EADS North America is surprising. With Democrats in control of the Executive Branch and both chambers of Congress, the selection of Crosby’s successor was an opportunity to distance the EADS tanker from its close ties to Republican senators and Red State interests. Instead, EADS has reinforced the perception that its tanker strategy is Republican-centric.

The long-running effort to award a contract for the new tanker has recently been complicated by a World Trade Organization finding that European governments illegally subsidized development of Airbus commercial transports. One of those transports, the A330, now is the challenger to Boeing’s 767 in the tanker competition. O’Keefe’s number-one challenge in his new job will be to get the WTO issue resolved so that it does not interfere with the tanker bid. The fact that he oversaw GE’s so-far-successful defense of the F-35 alternate engine (which the Obama Administration opposes) suggests he has the necessary political skills. And it was, after all, the Bush Administration — in which he served — that launched the WTO complaint against Airbus in the first place. Still, some observers think O’Keefe’s well known ties to Dick Cheney will be a mixed blessing for EADS.