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Boeing and Safran announce APU joint venture plan
June 8th 2018
Boeing is once again rocking its supply chain in its relentless quest for better cost control. Read More » This week, the Chicago-headquartered OEM announced a plan to form a joint venture with French engine maker and aerospace component firm, Safran, also a major Airbus supplier.
Boeing and Safran have agreed to jointly design, build and service Auxiliary Power Units (APUs), which will “create better value for customers and for both companies,” the firms said. An APU is an onboard engine that is used to primarily start the main engines and power aircraft systems on the ground and, if necessary, in flight.
Boeing and Safran will each hold a 50% stake in the partnership, which will be based in the U.S. The completion of the transaction is subject to customary conditions, including regulatory and antitrust clearance. The deal is expected to close in the second half of the year.
“This strategic partnership will leverage Boeing's deep customer and airplane knowledge along with Safran's experience in designing and producing complex propulsion assemblies to deliver expanded, innovative services solutions to our customers,” said Stan Deal, president and CEO of Boeing Global Services.
Safran currently supplies a wide range of components to Boeing commercial and defense programs, including as a partner to produce CFM's LEAP-1B engine for the B737 MAX programme (through CFM International, a 50/50 JV between Safran Aircraft Engines and GE). Boeing and Safran also are partners in MATIS, a joint venture in Morocco producing wiring products for several airframe and engine companies.
Safran is also a major supplier on the A330neo and other Airbus aircraft programmes.
“This will represent a new step in the long-lasting and fruitful partnership between Safran and Boeing. We are extremely proud of the continued confidence that Boeing has placed in our company. Safran has contributed to prestigious international military and civil programs, providing reliable, high-performance APU systems since 1962. Together we are committed to delivering advanced APUs and world-class support to our customers,” said Philippe Petitcolin, CEO of Safran. “This partnership will have no impact on our 2018 guidance nor on our plan to return Euro 2.3 billion cash to shareholders over 18 to 24 months.”
“This move will strengthen Boeing's vertical capabilities as we continue to expand our services portfolio and make strategic investments that accelerate our growth plans,” said Greg Smith, Boeing CFO and EVP of Enterprise Performance & Strategy. “The establishment of the joint venture will have no impact on Boeing's 2018 guidance or on our commitment to returning approximately 100 percent of free cash flow to shareholders,” Smith added.
