Markets
BA

Instant Analysis: Alcoa's Fastener Deal With Boeing Pushes Supply Contract Value to $2.5 Billion

What happened?

On Dec. 17, multi-metals producer Alcoa announced it had won supply contracts from aircraft manufacturer Boeing worth $2.5 billion for each of its platforms, including its newest commercial airplane, the 777X. Among the contracts is Alcoa's largest-ever fastener deal, which will see it serve as the exclusive supplier for three versions of Boeing's 787 Dreamliner, and seat track assemblies for all versions.

Does it matter?

Although there was no timetable laid out for the supply contracts, neither when they kick in or how long they will last, they are significant because of the number of orders for new planes both Boeing and rival Airbus are taking on. In October, Alcoa announced a $1 billion supply contract with the Boeing rival, which also included orders for fasteners.

While Alcoa is best known as an aluminum producer, earlier this year it acquired titanium and specialty metals producer RTI International Metals for $1.5 billion, which it said at the time broadened its appeal to aerospace manufacturers.

The expansion into titanium seems to be paying off already, as contracts RTI had previously won for seat track assemblies in 787-8 and 787-9 models going back to 2007 were largely responsible for its ability to gain the latest contracts with the 787-10. Alcoa notes that seat tracks are "critical structural assemblies that mount to the floor of the airplane, secure passenger seats and reinforce the structure of the fuselage." Titanium seat tracks are preferred because they offer better strength at lower weight, while providing better resistance against corrosion.

That's key for Boeing and Airbus, because carriers are looking for greater fuel efficiency in the latest models of planes they purchase.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Instant Analysis: Alcoa's Fastener Deal With Boeing Pushes Supply Contract Value to $2.5 Billion originally appeared on Fool.com.

Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BA AA

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More