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The chief executive of Boeing Co. said on Thursday it’s possible that his company will be underbid by its European competitor for the U.S. Air Force tanker contract.

Jim McNerney, who also is Chicago-based Boeing’s chairman, told analysts in New York that the chances are "very high" that Boeing will bid for the project. The Air Force wants 179 tankers, under a contract that could be worth roughly $35 billion. It’s a fixed-price contract, so whoever makes the planes absorbs much of the risk if they cost more to make than expected.

Work on the tankers will be done under Boeing’s Hazelwood-based Integrated Defense Systems unit. However, most of the work will be done outside of the St. Louis area.

Bids are expected by July 9 from Boeing and European Aeronautic Defense and Space Company, parent of Airbus.

McNerney said he’s expecting EADS to bid "aggressively."

"This can be a dangerous situation for Boeing. We have to bid responsibly," he said.

Boeing will bid "very aggressively," he said, but he added that Boeing will not aim "to only beat the lowest bid that Airbus could possibly come up with. Airbus could win this thing on price. I don’t want to put 10 years of performance of our company at risk in a fixed price development contract just to say ‘I’ve won the tanker deal.’

"The chances are very high we’re going to bid. The question will be, what’s the responsible bid for our company, and that’s what we’re working through right now."

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