Acquisition of Wichita division by Onex will see Canadian firm set up stand-alone aerostructures business in Kansas
Boeing has agreed to sell its Wichita/Tulsa division and Rocketdyne engine business to Onex and Pratt & Whitney (P&W) in two separate deals that will net the manufacturer over $1.7 billion.
The two sales are independent of one another and were announced on the same day "by coincidence", says Boeing. The deal with Onex, a Canadian-based corporation, includes the Commercial Airplanes sites in Wichita, Kansas, and Tulsa and McAlester, Oklahoma. The transaction, which has an overall value of $1.2 billion, does not include the military operations of Boeing Integrated Defense Systems in either Kansas or Oklahoma.
Onex managing director Seth Mersky says the transaction, some $900 million of which is in cash, "gives us the opportunity to set up a stand-alone, world-class aerostructures business in Kansas", and adds that "we intend to invest over $1billion in Wichita and Oklahoma in the next few years." The sites, which currently cater strictly to Boeing programmes including the 737, 747, 767 and 777, are also building-up to work as a supplier-partner on the 787.
However Onex says the sites are presently running at only 50% capacity "which is too low for optimum efficiency", and despite the advent of the 787 it intends to start immediately marketing the aerostructures' capability to the industry at large. Potential customers could include Airbus, Bombardier and others, says Onex.
Boeing Commercial Airplanes Wichita Division vice president and general manager Jeff Turner will continue to lead the operations as the company's new chief executive officer. Onex adds that it is "not buying a business per se. We are buying the plants and the assets." The bulk of the 9,000 Boeing workers at the three sites are therefore being asked to re-apply for their jobs, though Mersky says this is for practical reasons and is "not a Draconian issue at all". Boeing announced the possible sales of the sites in April 2004 and began negotiations with Onex in October.
Boeing has agreed to sell its Rocketdyne Propulsion and Power business to P&W in a deal worth around $700 million. The rocket maker, which was acquired by Boeing around a decade ago from Rockwell, has been part of the Integrated Defense System's Launch and Orbital Systems segment and generated revenues of around $700 million in 2004.
The acquisition of Rocketdyne, which provides engines for the Space Shuttle and Delta launch vehicle family and which recently developed the RS-68 liquid-fueled booster engine, is expected to be a good fit with P&W's rocket portfolio. Boeing says the sale does not affect its launch systems business.
GUY NORRIS / WASHINGTON DC
Source: Flight International
