Jobs could be secured at two BAE plants

BAE Systems and US giant Boeing signed a collaboration agreement on Wednesday to bid for the �13bn PFI contract to build air-to-air refuelling tankers for the RAF.

The contract is expected to be announced by the end of the year and if the joint bid is successful, jobs would be created at BAE's plants in Warton, Lancashire and Prestwick, Scotland.

BAE Systems said the joint venture, TTSC, would deliver the "best capability for the UK forces".

Mike Turner, chief executive, BAE Systems, said the contract would secure jobs, skills, and work for many years to come.

Jim Albaugh, president and chief executive of Boeing Integrated Defense Systems said there was a "significant global market" for refuelling tankers.

"We are excited about making Britain's aerospace industry part of our global tanker team," said Mr Albaugh.