Boeing won't throw "elbows" in dispute

Boeing, chided by the Air Force along with Northrop Grumman for the tone of its military-contract dispute, will avoid throwing "sharp elbows" without backing down from the protest, Chief Executive Officer Jim McNerney said Monday.

McNerney said it was "fair" of the Air Force to ask the companies to tone down the language of their dispute over a $40 billion aerial-tanker contract, which Northrop won Feb. 29, teaming up with the parent of Boeing's chief rival, Airbus. That doesn't make Boeing any less committed to pursuing its objection with the Government Accountability Office, McNerney said.

"We're going to avoid any needless sharp elbows, but I reassert our right to protest," McNerney told reporters after Boeing's annual shareholders meeting in Chicago on Monday.

"We have not given up on the tanker award," he told more than 100 shareholders at the meeting. "We think we have a strong and legitimate basis to protest."

A discussion among the Air Force, Boeing and Northrop "was about reminding us that we're all going to be friends when this is over," McNerney said. "We're all dependent on each other."

The Air Force is the largest single customer for Boeing, which was the sole supplier of tankers since the mid-1950s.

That hasn't stopped executives from calling the decision "seriously flawed" and charging the service with having "manipulated" some data in Northrop's favor.

Boeing lost its first chance at the contract in 2003 after an ethical scandal sent a company executive and a former Air Force official to jail.

"There is a certain amount of shamelessness about Boeing's current campaign to overturn the awarding of the tanker contract to a different company," shareholder Peter Flaherty, president of the National Legal and Policy Center, said at Monday's meeting.

"The only reason the contract was put out to bid was because Boeing broke the law in the first place."

The Falls Church, Va.-based center sponsored a shareholder resolution on executive pay that was rejected.