The Chicago-based aerospace giant said it planned to file the protest with the Government Accountability Office (GAO) on Tuesday.

"Our team has taken a very close look at the tanker decision and found serious flaws in the process that we believe warrant appeal," said Boeing chairman, president and chief executive Jim McNerney in a statement.

"This is an extraordinary step rarely taken by our company, and one we take very seriously."

Once Boeing files the protest, the contract will be suspended until the GAO, the investigative arm of the US Congress, makes its decision.

On February 29, the air force awarded the estimated 35-billion-dollar contract to build up to 179 military refueling planes to Northrop Grumman Corporation and the European Aeronautic Defence and Space Company (EADS), parent of Airbus, Boeing's arch-rival in commercial aircraft.

It was a stunning upset for Boeing, until now the sole supplier of air refueling planes to the US military.

The contract raised a furor and a protectionist backlash among Boeing backers in the US Congress who charge that it will cost US jobs, and that the requirements were changed in a way that favored the larger Airbus aircraft built by EADS.

The air force briefed Boeing on Friday about why its bid was rejected. Northrop Grumman and EADS received a briefing on Monday.

Boeing said an analysis of the air force's selection process led it to conclude that a protest was necessary.

"Based upon what we have seen, we continue to believe we submitted the most capable, lowest risk, lowest 'most probable life cycle cost' airplane as measured against the air force's request for proposal," McNerney said.

"We look forward to the GAO's review of the decision," he added.

Boeing said it would provide more details with its Tuesday filing.

The Pentagon has defended the contract, saying it resulted from a fair competition that gave the American taxpayer the best value for the best price.

The new air refueling tanker, dubbed the KC-45, will replace the air force's fleet of aging Boeing KC-135 tankers. The contract is for an initial phase in a project estimated to be worth 100 billion dollars.

Air force spokeswoman Lieutenant Colonel Jennifer Cassidy, asked by AFP about Boeing's statement that it plans to protest the decision, said: "We are unable to comment since we haven't seen it."

Earlier, Defense Department spokesman Geoff Morrell said it was "a fair and transparent competition."

"Airbus won, based upon the merits of their proposal. And I think that the taxpayers are being provided with the best value for their dollar. And the warfighters are getting the best plane possible," he told reporters.

Northrop Grumman said the air force in Monday's briefing had "fully explained why the company's KC-45A tanker offering was clearly the superior tanker for the contract to replace the service's aerial refueling tankers."

Airbus, based in France, will assemble commercial 330s in Alabama. Separately, Northrop Grumman will convert the planes into tankers using sensitive military technology that is not to be shared.

The surprise choice of EADS marks the European group's entry into the lucrative US defense market, where it had a much smaller footprint.

In May 2003, a similar tanker contract was awarded to Boeing, but it was annulled under allegations of procurement fraud, for which Boeing paid a record 615-million-dollar settlement to the US government.

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