Merger Expected To Be Approved By Q3 2006

Last week, Aero-News reported that Boeing -- helped by a very strong showing of its commercial aircraft division in the first quarter of 2006 -- took in 29 percent increase in profit over the same period in 2005. On Monday, Boeing announced its plans to spend some of its cash -- by purchasing aerospace parts and services provider Aviall, Inc.

Under terms of the all-cash acquistion, Boeing is purchasing Dallas, TX-based Aviall for $48 per share -- or $1.7 billion. Boeing will also assume approximately $350 million of net debt as part of the transaction. Aviall's 2005 revenue was $1.3 billion, with more than 25 percent growth expected in 2006.

"The aviation services market offers us tremendous opportunities to profitably grow our business, internally and externally, to better serve our commercial and military customers," said Boeing Chairman, President and Chief Executive W. James McNerney (right). "This acquisition is uniquely powerful in that it leverages the strong and growing services units of both our commercial and military businesses. It demonstrates our commitment to create a Boeing that is more than just the sum of its parts," McNerney said.

"We are delighted to become part of The Boeing Company," said Paul Fulchino, chairman, president and chief executive officer of Aviall. "Our combined industry knowledge creates a dynamic team that will continue to enable our customers to achieve greater efficiency, operational savings and profitability."

Aviall will report to Boeing Commercial Aviation Services and operate as a wholly-owned subsidiary. Commercial Aviation Services offers Integrated Materials Management (IMM) services to airline customers.

Through the IMM 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 utilized by Boeing's Integrated Defense Systems' Support Systems business.

"Aviall will quickly become an integral part of our Commercial Aviation Services business and accelerate our Integrated Materials Management program," said Alan Mulally, Boeing Commercial Airplanes president and CEO.

"Aviall is customer focused, has a strong growth plan and proven track record of solid financial performance. It is a perfect fit for our strategy of providing supply chain management solutions that help our airline and military customers operate more efficiently and productively," Mulally said.

The completion of the transaction is subject to customary conditions and relevant authorities' approval and is expected to close by the end of the third quarter 2006. Boeing plans to fund the transaction with existing cash. The acquisition is expected to be modestly accretive to Boeing's earnings in 2007 and have an immaterial earnings impact in 2006.

With approximately 1,000 employees, Aviall is the world's largest independent provider of new aviation parts and related aftermarket services. Aviall markets and distributes products for approximately 220 manufacturers and offers approximately 700,000 catalog items.

Aviall also offers a full line of aviation batteries, hoses, wheels and brakes, and paint services.

FMI: www.aviall.com, www.boeing.com