Boeing wins £2bn spyplane deal

BOEING has overcome the row over its deal to supply the Pentagon with a new air-tanker fleet to win a $3.9bn (£2.1bn) Navy contract.

It will supply a replacement for the submarine-hunting P-3 aircraft after beating Lockheed Martin to the deal. Britain's Smiths Group will supply some of the electronics.

Navy acquisitions chief John Young said operating and development costs could rise to $44bn over 25 years.

Boeing, which had thought issues over how it procures government contracts could work against it, was overjoyed.

'Obviously this is a terrific day for us,' said John Lockard, senior vice president and general manager of Boeing Naval Systems.

But there was also relief the stalled $23.5bn tanker deal with the US Air Force did not knock Boeing out of the race.

That plan to lease and buy 100 Boeing 767 refuelling tankers fell apart in the face of intense criticism from both within and outside of the Pentagon.

Boeing's top military official, Jim Albaugh, conceded he had worried that tanker-related issues could jeopardise the Navy deal.

It will supply modified versions of its 737-800 passenger jet complete with advanced computers and other electronic gear from Raytheon, Northrop Grumman and Smiths.