Boeing has 739 employees and 236 suppliers and vendors in Utah. The local leaders said in December that awarding the contract to Boeing could bring Utah 600 jobs and $22 million. The leaders also cited national security concerns because EADS is a French company.

In after-hours trading Friday, shares of Northrop initially surged more than 5 percent before retreating to $78.83, an increase of 22 cents. Boeing's stock price fell $2.64 to $80.15.

The Northrop-EADS refueling tanker, the KC-45A, "will revolutionize our ability to employ tankers and will ensure the Air Force's future ability to provide our nation with truly global vigilance, reach, and power," Air Force Gen. Duncan J. McNabb said in a statement.

Air Force officials offered few details about why they chose the Northrop-EADS team over Boeing, since they have yet to debrief the two companies. But Air Force Gen. Arthur Lichte said the larger size was key. "More passengers, more cargo, more fuel to offload," he said.

The Air Force has estimated the tanker contract will be worth between $30 billion and $40 billion over 10 to 15 years. It is the first of three deals that could eventually be worth as much as $100 billion over 30 years to replace the entire Air Force fleet of nearly 600 refueling tankers.

As the winners of the first award, EADS and Northrop will be in a strong position to win the two follow-on deals, analysts believe.

Military officials say the Air Force is long overdue to replace its air-to-air refueling tankers, which allow fighter jets and other aircraft to refuel without landing. The service currently flies 531 Eisenhower-era tankers and another 59 tankers built in the 1980s by McDonnell Douglas, now part of Boeing.

But the new contract has emerged as a major test for the Air Force, which is trying to rebuild a tattered reputation after a procurement scandal in 2003 sent a top Air Force acquisition official to prison for conflict of interest and led to the collapse of an earlier tanker contract with Boeing.

The tanker deal is also certain to become a flashpoint in a heated debate over the military's use of foreign contractors, since Boeing painted the competition as a fight between an American company and its European rival. Boeing is expected to protest the decision.

Boeing spokesman Jim Condelles said the company is disappointed but has not yet made a decision about whether to appeal the award. The loss of the Air Force tanker contract means Boeing's 767 aircraft, which are manufactured in Everett, Wash., will be replaced by the 787 model after existing commercial and cargo orders are completed.

The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, Ala., although the underlying plane would mostly be built in Europe. And it would use General Electric engines built in North Carolina and Ohio. Northrop Grumman estimates a Northrop/EADS win would produce 2,000 new jobs in Mobile and support 25,000 jobs at suppliers nationwide.

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E-mail: lhancock@desnews.com