Integration focus continues

Boeing to sell Rocketdyne and Wichita Division

Boeing's forthcoming sales of its commercial-aircraft factories in Kansas and Oklahoma and its Rocketdyne rocket-engine business reflect the company's continuing focus on large-scale systems integration, aerospace industry observers said.

Boeing said last month it would sell its Commercial Airplanes facilities and assets in Wichita, Kan., and Tulsa and McAlester, Okla., to Onex Corp. of Canada for about $900 million, transfer of certain liabilities and "long-term supply agreements that provide Boeing ongoing cost savings," Boeing said in a statement. Boeing Integrated Defense Systems operations in Wichita and Oklahoma are not included in this transaction.

Separately, Boeing said it agreed to sell its Rocketdyne Propulsion & Power business to Pratt & Whitney, a United Technologies company, for about $700 million in cash. Both transactions are subject to regulatory approvals and other customary closing conditions. The sales will help Boeing lower overhead costs and focus on doing more systems integration work, said J.B. Groh, an analyst at D.A. Davidson & Co., in a Bloomberg News report.

Also in that report, Lawrence Kohn, an analyst at Pzena Asset Management, said Boeing has sold assets such as these "for some time now, and the strategy seems to be working." Alan Mulally, Commercial Airplanes president and CEO, said Boeing selected Onex based on its successful history of investing in and growing companies. The transaction, Mulally said, "also will allow employees at the Wichita/Tulsa Division to pursue work for other companies besides Boeing, with the potential of increasing their business base and positioning to be more stable as our industry goes through periodic economic cycles."

Onex, a diversified company with operations in service, manufacturing and technology industries, said it intends to grow the value of the Wichita/Tulsa operations and invest over $1 billion in Kansas and Oklahoma in the next few years.

"We want to get this place back to 18,000 employees," said Seth Mersky, an Onex managing director, in a Wichita (Kan.) Eagle report. According to Boeing, about 9,000 Commercial Airplanes employees currently work at the Wichita, Tulsa and McAlester sites.

Meanwhile, analysts said Pratt & Whitney's purchase of Rocketdyne should help broaden its product line.

"I don't normally see Pratt & Whitney and Rocketdyne in competition with each other," said Marco Caceres, a space analyst for the aerospace research firm Teal Group Inc., in a Los Angeles Times report.

Boeing's sale of Rocketdyne includes sites and assets in California, Alabama, Mississippi and Florida. Approximately 3,000 people support the operations at those sites. said.