A European consortium was today (January 26) named as the preferred bidder for a £13bn contract to supply refuelling aircraft to the RAF, which will be based at Brize Norton.

There were two bidders for the deal, which will create about 600 jobs at the west Oxfordshire base.

The winner is AirTanker, led by the Franco-German defence group EADS, which fought off the rival Tanker and Transport Service Company led by UK defence contractor BAE Systems and US giant Boeing.

The Ministry of Defence will now start detailed negotiations on the terms of the contract with the AirTanker consortium, which also includes Rolls Royce.

AirTanker had emerged as the favourite to win the 27-year private finance initiative contract after an annual review of the armed services weapons programmes revealed BAE was more than £3bn over budget on three key contracts with the MoD.

Both parties have promised to create hundreds of jobs by replacing the existing fleets of ageing VC10 and Tristar aircraft, which are reaching the end of their operational life.

AirTanker will supply a fleet of planes based on the Airbus A330 airliner.

The new jobs will include engineering, training and service management positions.

The local economy will also benefit from new buildings and workshops at the base and the positive spin-off effects on shops and businesses.

The announcement is the second boost for RAF Brize Norton within a year following the news that up to 700 jobs will be created with the arrival of the RAF's new transport aircraft, the Airbus A400M. It will replace Hercules aircraft based at RAF Lyneham in Wiltshire.

Defence Secretary Geoff Hoon said: "Our evaluation of the two PFI bids has been extremely thorough and has clearly identified that AirTanker's bid offers the best prospect of securing a value for money PFI service."