Aviation News
Boeing to Sell Commercial Airplanes Operations in Kansas and Oklahoma to OnexWICHITA, Kansas, Feb. 22, 2005 – The Boeing Company [NYSE: BA]
and Onex Corporation today announced an agreement under which Onex
will acquire the Wichita/Tulsa Division of Boeing Commercial Airplanes.
The transaction includes Commercial Airplanes facilities and assets
in Wichita, Kansas, and Tulsa and McAlester, Oklahoma. Transaction
consideration to Boeing includes approximately $900 million cash,
transfer of certain liabilities and long-term supply agreements that
provide Boeing ongoing cost savings. The single-source supply agreements
cover the structures and parts currently produced by the Wichita/Tulsa
Division, providing a stable base of revenue for the new business
to build upon. In addition, the Wichita/Tulsa operations will continue
as a major partner on the 787 Dreamliner.
The sale is expected to close during the second quarter of 2005.
Boeing expects to recognize a non-cash loss on the transaction attributable
to the transfer of pension related assets and liabilities. Recognizing
these non-cash charges at closing will reduce future pension expenses.
Boeing Integrated Defense Systems operations in Wichita and Oklahoma
are not included in the transaction.
"This agreement fully supports our strategy to focus Boeing on large-scale
systems integration, which is where we are most competitive and can
add the most value to our airplanes and services," said Boeing Commercial
Airplanes President and Chief Executive Officer Alan Mulally. "Boeing
will benefit from lower procurement costs and the Wichita/Tulsa operations
now can grow by winning new business with other customers."
Mulally said Boeing selected Onex based on its successful history
of investing in and growing companies.
Onex will form a new company to operate the facilities. The plants
will continue to operate under the leadership of Jeff Turner, currently
vice president and general manager of the Boeing Commercial Airplanes
Wichita Division, who will be the new company's CEO.
"Onex has a strategy to build the most efficient and innovative
company in the aerostructures industry. We intend to invest over
$1 billion in Kansas and Oklahoma in the next few years," said Seth
Mersky, an Onex managing director.
Mersky said Onex's vision is to grow the value of the Wichita/Tulsa
operations over a number of years.
"We are committed to working in close partnership with the current
Wichita/Tulsa senior leadership team to make the transition as seamless
as possible," added Nigel Wright, another Onex managing director. "The
new company will compete for work inside and outside of Boeing, providing
potential for more, and more stable, jobs. The key is to get the
cost structure right."
Boeing announced in April 2004 that it was studying the possible
sale of its plants in Wichita , Tulsa and McAlester . Boeing included
balancing the interests of employees, customers, shareholders and
its plant communities in its criteria for the decision.
"We firmly believe that this decision provides the best available
outcome for the Wichita/Tulsa Division and its plant communities
by creating new opportunities for sustained growth as a separate
operation. Onex shares this perspective, and we look forward to a
long and productive relationship together," Mulally said.
Approximately 9,000 Commercial Airplanes employees currently work
at the Wichita , Tulsa and McAlester sites. The Division incurred
approximately US$2.2 billion in annual costs for 2004. The facilities
currently supply Boeing with fuselage and other structural components
for the 737, 747, 767 and 777 programs, and the division is a supplier
partner on the 787 Dreamliner.
The transaction is subject to a number of conditions before closing,
including U.S. government reviews.
Goldman Sachs advised The Boeing Company on this transaction.
About The Boeing Company
With headquarters in Chicago , The Boeing Company is the largest
aerospace company in the world and is one of the leading U.S. exporters.
It is the world's largest manuf acturer of commercial jetliners and
military aircraft, and the largest NASA contractor. The company's
capabilities in aerospace also include rotorcraft, electronic and
defense systems, missiles, rocket engines, satellites, launch vehicles
and advanced information and communication systems. The company has
an extensive global reach with customers, manufacturing facilities,
suppliers and business partners throughout the world. Boeing Commercial
Airplanes produces the popular 7-series jetliner family, and is setting
a new standard for jetliners with its upcoming 787 Dreamliner. Boeing
Commercial Airplanes is headquartered in Seattle , Wash.
About Onex
Onex is a Toronto-based diversified company with annual consolidated
revenues of approximately Cdn$16 billion and consolidated assets
of approximately Cdn$12 billion. It is one of Canada 's largest companies
with global operations in service, manufacturing and technology industries.
Its operating companies include Celestica Inc.; Magellan Health Services,
Inc.; ClientLogic Corporation; Cineplex Galaxy LP; J.L. French Automotive
Castings, Inc.; Res-Care, Inc.; Radian Communications Services Corporation;
Emergency Medical Services Corporation; Cosmetic Essence, Inc.; Center
for Diagnostic Imaging, Inc. Onex shares trade on the Toronto Stock
Exchange under the stock symbol OCX.SV.
Onex Partners LP has acted as managing partner for this transaction.
In early February 2004, Onex completed the final closing of the Onex
Partners Fund, with total commitments of US$1.65 billion. The fund
provides capital for Onex-sponsored acquisitions not related to Onex's
existing operating companies or to ONCAP. Onex controls the General
Partner and Manager of the Fund and has committed US$375 million
to Onex Partners LP.
Safe Harbor Statement / Forward-Looking Statements
Certain statements contained in this press release are considered "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, and it is Boeing's intent that such statements
be protected by the safe harbor created thereby. Forward-looking
statements include, but are not limited to statements regarding:
(1) the expected closing date of the transaction, (2) the expected
costs savings arising out of the transaction, and (3) the expected
effect of the transaction on future pension expenses. These forward-looking
statements are subject to a number of risks, uncertainties and other
factors that could cause actual results to differ materially from
future results expressed or implied by such forward-looking statements.
Potential risks and uncertainties include, but are not limited to:
(a) the risk that the transaction may close more slowly than expected
or not at all; (b) the risk that the cost savings arising out of
the transaction may be less than anticipated, and (c) other risks
and uncertainties detailed from time to time in Boeing's filings
with the Securities and Exchange Commission.
###
Contacts:
Chuck Cadena, 206-437-0138, Boeing Commercial Airplanes (Seattle)
Dick Ziegler, 316-523-1465, Boeing Commercial Airplanes (Wichita)
Dan Wilinsky, 816-512-2430, Fleishman-Hillard (for Onex)
Steve Hendrickson, 918-832-3352, Boeing Commercial Airplanes (Tulsa/McAlester)
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