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The reason this matters is that the two rivals are both offering modified airliners in their tanker proposals, and the Airbus entry was built using $5.7 billion in illegal subsidies.

Where did the subsidies come from? If they were paid by a foreign country, I say great. It's about time someone outside of the USA pays a bit for the defense we provide to the world.

As for building new KC-135 and KC-10 airframes, why not, the C-130 is still in use and is still being made. The airframes are proven, add newer avionics, engines, and advanced materials and you have a familiar airframe with increased capabilities.

Now on to the tinfoil hat part of my rant. Tankers are what allow us to project power (in addition to the Navy of course). No tankers and our ability to project power is severely limited. Methinks those that want the USA neutered have a hand in the delays with this program.

As for building new KC-135 and KC-10 airframes, why not, the C-130 is still in use and is still being made.

I am trying not to laugh because I am sure this stuff is not obvious to someone not in the industry. The C-130's currently being produced are very different from the old ones. The frame is somewhat similar but the guts are very different. There a LOT to a plane aside from just the frame. I mean, imagine bulldozing a house and then reusing the foundation. In reality you would spend more time redesigning your dream house to fit on that foundation than you would if you just dug a new hole, pored new cement, and not paid the architect to keep redesigning. That is what it is like to reuse the 'frame' of the plane but to put on new engines, avionics, etc. And you HAVE to put all new systems in the plane because no one makes the old ones any more.

the C-130J currently being made cost a LOT to develop because they put a lot of new systems and capabilities into it.

Plus there is brain drain and 'organizational knowledge'. The short version is that it is easier to 'rev' a plane currently being built than it is to dust off an antique design and try figure out what the designers were thinking 50 years ago. You will spend time reproducing features that were flaws to begin with. Or waste time because you tossed out something as unimportant only to discover that the designer had some convoluted but important reason that was there. You basically end up reverse engineering the whole thing, just to get the same capability you already had. Instead if you spend a similar amount of time starting from scratch you can get more capability that is cheaper to build and maintain. Just the way we make things today does not match what was done back then. Every little part would have to be tweaked to match how modern CnC manufacturing is done.

Anyway, the 767 frame and the airbus frame they are talking about are based off of current designs that are in production. Adapting one of those is the cheapest possible plan.... other than doing nothing, or stretching the current tankers a few more years.