The Pentagon is set to restart a much delayed and controversial $35bn competition to replace the US Air Force’s ageing fleet of air refuelling tankers, marking its third attempt at letting the contract.

The contest once again pits Boeing, the US aerospace and defence contractor, against a joint US and European team led by Northrop Grumman and EADS, the Franco-German parent of Airbus, the aircraft maker. With defence budgets under pressure around the world and commercial aerospace suffering amid the economic downturn, analysts say the contract to supply an initial 179 aircraft is crucial to the prospects of both teams.