In the late 1990s Airbus became increasingly interested in developing and selling to the military aviation market. Expansion in the military aircraft market is desirable as it reduces Airbus' exposure to downturns in the civil aviation industry. It embarked on two main fields of development: aerial refuelling with the Airbus A310 MRTT and the Airbus A330 MRTT, and tactical airlift with the A400M.
In January 1999 Airbus established a separate company, Airbus Military, to undertake development and production of a turboprop-powered tactical transport aircraft, the Airbus Military A400M. The A400M is being developed by several NATO members, Belgium, France, Germany, Luxembourg, Spain, Turkey, and the UK, as an alternative to relying on foreign aircraft for tactical airlift capacity, such as the Ukrainian Antonov An-124 and the American C-130 Hercules. The A400M project has received several delays; Airbus has threatened to cancel the development unless it receives state subsidies.
Pakistan placed an order for the Airbus A310 MRTT in 2008, which will be a conversion of an existing airframe as the base model A310 is no longer in production. On 25 February 2008 it was announced that Airbus had won an order for three air refuelling Multi-Role Tanker Transport (MRTT) aircraft, adapted from A330 passenger jets, from the United Arab Emirates. On 1 March 2008 it was announced that a consortium of Airbus and Northrop Grumman had won a $35 billion contract to build the new in-flight refuelling aircraft KC-45A, a US built version of the MRTT, for the USAF. The decision drew a formal complaint from Boeing, and the KC-X contract was cancelled to begin bidding afresh.
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