Aviall Sold to Boeing

May 02, 2006 2:54 AM  By

Chicago-based Boeing Co., the world’s leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft, just extended its reach a little higher. The company announced its acquisition of Aviall, a Dallas-based distributor of aircraft components with about 1,000 employees, for $1.7 billion ($48 per share) in an all-cash merger.

Aviall markets and distributes products for approximately 220 manufacturers and offers approximately 700,000 catalog items from distribution centers in North America, Europe, and Asia-Pacific. In 2004, Aviall’s direct sales hit $83 million, while total sales reached $1.16 billion. Last year Aviall’s revenue increased to $1.3 billion, and it’s projecting growth of more than 25% this year. Founded in 1932, Aviall circulates more than 17,000 catalogs a year.

Aviall will report to Boeing Commercial Aviation Services and operate as a wholly owned subsidiary. Through this program, Boeing and selected suppliers maintain an airline’s inventory of maintenance supplies — including spare parts — and provide items only as needed, reducing the airline’s cost and complexity of doing business. Aviall’s parts ordering and supply chain management capabilities will also be used by Boeing’s Integrated Defense Systems’ Support Systems business.

David Leedy, Aviall’s director of financial planning and investor relations, says that the acquisition won’t make much of a difference to Aviall’s customters. “At least initially, we’ll continue doing the things we’re doing,” he says. “The changes will be minimal. Boeing has said to us that they’re interested in us continuing to do the things we’re doing.”

Looking ahead, Leedy adds that “n the future, the intent is to utilize the synergies that will be put in place. Exactly what those things will be, it’s too early to tell. But their intent is not to come in here and make a bunch of changes or cut a bunch of staff to save a bunch of money.”

Boeing employs more than 153,000 people in nearly 70 countries. In a press release, the merger will help Boeing expand its leadership role in Integrated Materials Management and “position the company for faster growth in a $25 billion industry of new aviation parts and services.”

Boeing CEO W. James McNerney said in a statement that the aviation services market offers the company “tremendous opportunities to profitably grow our business, internally and externally, to better serve our commercial and military customers.”