U.S. aluminum producer Alcoa Inc. on Thursday signed a long-term contract to supply aluminum sheet and plate products to aerospace giant Boeing Co. for the manufacture of aircraft. The multi-year supply contract, the largest ever between the two companies, is valued in excess of $1 billion.
Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems.
"We are proud that Alcoa's lightweight structural solutions will continue to fly on Boeing's most advanced aircraft today, and that our metallic science leadership will contribute to the Boeing aircraft of tomorrow," Alcoa Chairman and CEO Klaus Kleinfeld said in a statement.
Alcoa also noted that the two companies will also work together on developing new, innovative, high-strength and corrosion-resistant aerospace alloys, including aluminum-lithium.
Following the contract, Alcoa will become the sole supplier for wing skins on all of Boeing's metallic structure airplanes. Alcoa plate products that are used for wing ribs, wing skins or other structural parts of the aircraft will be on each and every Boeing aircraft, including the 787 Dreamliner.
Alcoa's aerospace business generated revenues totaling $4 billion in 2013, contributing 57 percent of overall revenues and 80 percent of segment profits.
Meanwhile, the agreed acquisition of British aerospace parts maker Firth Rixson Ltd. in the second quarter will further strengthen Alcoa's robust aerospace portfolio. The deal will see Alcoa's annual aerospace revenues grow by 20 percent to $4.8 billion on a proforma basis and expand its product suite in growing jet engine segment.
Alcoa agreed in late June to acquire Firth Rixson from its US-based private-equity owner Oak Hill Capital Partners in a cash and stock deal valued at $2.85 billion and is expected to close by end-2014.
"This historic agreement not only continues the 35-year Alcoa-Boeing partnership, it will take our collaboration on next-generation metallic technologies even further," Kleinfeld added.
In Thursday's regular trading session, AA is currently trading at $17.12, down $0.08 or 0.49% on a volume of 3.09 million shares, and BA is trading $127.70, down $0.52 or 0.41% on a volume of 0.31 million shares.
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