LONDON (Bloomberg) - European Aeronautic, Defence & Space Co. (EADS) and four partners signed a £13 billion ($26 billion) contract to manufacture a fleet of airborne refueling tankers for Britain's Royal Air Force.

AirTanker, a joint venture including Airbus SAS parent EADS and enginemaker Rolls-Royce Group plc., will build 14 tankers based on Airbus A330 planes, the UK Ministry of Defence said yesterday in a statement. Under the 27-year agreement, a so-called Private Finance Initiative, AirTanker will manufacture the aircraft and lease them to the RAF.

The contract signing comes less than four weeks after EADS won a $35 billion tanker contract from the US Air Force, beating out Boeing Co. Electronics for the UK planes will be supplied by France's Thales SA, Europe's biggest defense-electronics maker. Wimborne, England-based Cobham plc. will provide refueling equipment, and Southampton, England-based VT Group will manage facilities.

"It's been some time in coming," said Yan Derocles, an analyst at Oddo Securities in Paris.

EADS CEO Louis Gallois "has been looking for more services contracts with recurring revenues, so this contract fits in with that," he said.

The tankers, set to enter service in 2011, will replace the RAF's fleet of VC-10 and TriStar planes and be based at a purpose- built facility in Brize Norton, England.

The planes will be leased to airlines when they aren't being used by the military. Fuel will be carried in the tanks, wings, fuselage and tail, leaving the cabin free for as many as 300 passengers.

"The A330s will provide a state-of-the-art, air-to-air tanker and passenger aircraft supporting operations around the world and delivering British forces to operational theaters," Defence Minister Ann Taylor said in a statement.

AirTanker was named preferred bidder in February 2005, beating a group led by Chicago-based Boeing and BAE Systems plc. of London. The contract is the UK's biggest-ever defense-related Private Finance Initiative, in which the government shares the risk of financing the work.

"Achieving a satisfactory outcome to this complex, high value, PFI deal has been challenging, particularly given the factors currently affecting the financial markets," Ms. Taylor said.

The Airbus tankers will refuel RAF combat planes such as the Tornado and Eurofighter Typhoon, and also will be utilised for transport missions.

AirTanker borrowed 2.5 billion pounds through financing unit AirTanker Finance Ltd. to help pay for the construction of facilities at Brize Norton. Moody's Investors Service rates the bank loan "Baa1", its eighth-highest investment grade ranking.

Under the March 1 agreement with the US military, Paris-and Munich-based EADS and partner Northrop Grumman Corp. will initially supply 179 tankers.