About a year ago we told you how Boeing had recently spun off part of its Commerical Airplanes group, supposedly to reduce costs and focus on "large scale systems."
In 2005 Boeing decided to sell the Wichita/Tulsa Division of its Commercial Airplanes group to Toronto-based Onex for about $900 million in cash, naming the new company "Spirit AeroSystems." Although that division was going to play a major part in Boeing’s future, including being responsible for the 787 Dreamliner nose section, Boeing believed that getting rid of it was a positive strategic move.
Lo and behold, the new company leveraged lean and became profitable.
Now, 18 months later, the bargain has exceeded everyone’s wildest dreams. An IPO on Nov. 21 raised $1.4 billion. Each Machinist is about to receive $61,440 in cash and stock. Given Boeing’s backlog of orders, plus a surge of defense-related spending, analysts figure Spirit’s stock will do well in the next few years. The commercial plane business is booming, which is why Spirit expects to post a 2007 profit of $260 million on projected revenues of $4.1 billion, up from about $3.2 billion in 2006.
Only 18 months to generate $1.4 billion in an IPO and throw off $260 million in profit… on a $900 million investment. And now there’s another angle.
Spirit AeroSystems signed an agreement with Russia’s United Aircraft Corp. that could lead to work on Russian civil aircraft projects. "We agreed to develop a long-term working together relationship," Bob Waner, Spirit’s senior vice president and chief technology officer, said after returning from Moscow, where the companies signed a memorandum of understanding last week. United Aircraft Corp. is the umbrella group working to resurrect Russia’s aviation industry.
So not only are they raking in the bucks, Boeing’s spinoff is now setting itself up to become a competitor to… Boeing. Spirit brings some skillsets to the equation.
Spirit brings expertise in composite structures and in lean manufacturing techniques, he said. "That’s what makes Spirit attractive to people who are in the business of (building) airplanes for sale," Waner said. In September, United Aircraft Corp. rolled out a regional jet. There are plans for derivatives of the aircraft and plans for a single-aisle commercial aircraft, he said.
Sure it will take many years for the Russian airliner industry to get past the reputation of Aeroflot and the Tupolevs. But I wonder if anyone at Boeing is questioning their "positive strategic move."