PAUL LEWIS / FARNBOROUGH
Boeing is negotiating to buy out FlightSafety International's share in the FlightSafetyBoeing (FSB) joint venture. This comes as the result of irreconcilable differences between the two partners over the future direction of the five-year-old airline training business.
Talks are understood to be focusing on the price Boeing will pay for FlightSafety's 50% stake in FSB. FlightSafety founder and FSB chief executive Al Ueltschi initially was seeking $400 million from Boeing, but this has been negotiated down to between $300 million and $325 million, according to a source close to the company's senior management. A deal to split up FSB could come as early as September.
At issue is the value of the assets FlightSafety and Boeing brought to the business and the investment in new facilities since the joint venture was formed in 1997 to train flight crews and ground personnel for aircraft with 100 seats and larger. FlightSafety, for instance, contributed its former TWA training centre, while Boeing supplied its Seattle-based simulator facility. FlightSafety also sold its China-based joint venture to FSB after the venture was created.
Relations between Boeing and FlightSafety have been deteriorating for the last six months over the issue of how to develop the business in the wake of 11 September and the industry downturn, says the source. "Ueltschi wants an operation that makes money. Boeing wants a business that helps to sell aircraft," says an observer.
Boeing typically provides flight crew training to airlines as part of an aircraft sales package, but then has to compensate the joint venture for use of its simulators. Differences have also emerged over Boeing's proposed investment in Malaysia Airlines' (MAS) training centre in a bid to bolster aircraft sales to the carrier. FSB opposes the move because of the terms agreed for MAS's use of the facility.
Source: Flight International
