News
Boeing and Adient joint venture addresses “persistent challenge”
January 19th 2018
Boeing this week announced the establishment of Adient Aerospace, a joint venture that will develop, manufacture and sell aircraft seating products on new airplanes and also as retrofits for jets produced by Boeing and other OEMs. Read More »
Adient will be the majority shareholder in the company, with equity of 50.01%, and expects the joint venture to be included in its consolidated financial statements. Boeing, with 49.99% of the company, will receive a proportionate share of the earnings and cash flow from the joint venture. Both will have representation on Adient Aerospace's board of directors.
Boeing said the formation of Adient Aerospace “addresses the aviation industry's needs for more capacity in the seating category, superior quality and reliable on-time performance”, clearly a jab at Zodiac Aerospace, the interiors provider which has delayed countless aircraft deliveries because it was late delivering components.
Zodiac has been taken over by Safran in a EUR8.5 billion deal. In late December, the European Commission “unconditionally” approved their merger, concluding “the transaction would raise no competition concerns in the relevant markets”.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Both Safran and Zodiac are significant French actors in the aeronautics markets but competition in these markets in Europe will remain strong. We can green light this transaction and the emergence of a strong European player with our EU merger rules.”
Industry analysts forecast the commercial aircraft seating market will grow from approximately US$4.5 billion last year to $6 billion in 2026.
Boeing Commercial Aircraft senior vice president of Supply Chain Management, Finance & Business Operations and CFO, Kevin Schemm, said: “Seats have been a persistent challenge for our customers, the industry and Boeing. We are taking action to help address constraints in the market.”
“This joint venture supports Boeing's vertical integration strategy to develop in-house capabilities and depth in key areas to offer better products, grow services and generate higher lifecycle value,” Schemm said.
Adient Aerospace's operational headquarters, technology center and initial production plant will be in Kaiserslautern, Germany and the joint venture's initial customer service center will be in Seattle. Adient Aerospace’s aftermarket spare parts distribution will be serviced exclusively by Aviall, a 100% owned Boeing subsidiary.
