Vought CEO: Tight credit led to $580M sale
Dallas Business Journal - by Kerri Panchuk Web Reporter
Elmer Doty, president and CEO of Vought Aircraft Industries Inc., told the Dallas Business Journal Tuesday if it weren't for significant tightening in the credit and financial markets, it’s likely the company would have been able to continue building parts for The Boeing Co.’s 787 Dreamliner aircraft program at Vought’s South Carolina facility.
Instead, Dallas-based Vought announced Tuesday that it's selling its South Carolina 787 operations and facility to Boeing for $580 million.
Doty said expenses became an insurmountable issue for Vought, which originally ancitipated first delivery of the aircraft to take place in 2008. The first delivery is now scheduled for 2010, he said.
“If you look at last year alone, we invested $300 million in the program," Doty said. “At this point, we’re a company pushing $2 billion in annual sales, and we have a billion dollars in debt.”
Doty said when Vought first took on the program in 2005, it was consistent with the company's resources. But the financial demands grew beyond what it could support. So far, Doty said, Vought has invested more than twice the amount anticipated, and it would have had to invest even more to proceed.
About 350 to 400 employees in Dallas are providing engineering and support services to Boeing, and there are no planned staffing changes as a result of the sale. He said staffing levels will be dependent on how long Boeing will require that support. Doty added that he’s proud of the services employees in Dallas have provided and believes they will continue to be critical to the 787 Dreamliner program.
Boeing will acquire the South Carolina facility, assets and inventory and will assume operation of the site. Separately, Boeing entered into new agreements with Vought for work packages on its 737, 777 and 787 aircraft.
"Integrating this facility and its talented employees into Boeing will strengthen the 787 program by enabling us to accelerate productivity and efficiency improvements as we move toward production ramp-up," said Scott Carson, president and CEO of Boeing Commercial Airplane, in a statement. "In addition, it will bolster our capability to develop and produce large composite structures that will contribute to the advancement of this critical technology.
Vought will receive $580 million upon closing of the sale. Doty said the proceeds will be used to pay down debt, with some funds being retained for general corporate purposes.
kerripanchuk@bizjournals.com | 214.706.7106
Most Read Stories |
Most Emailed Stories |
