Boston, MA 05/28/2014 (wallstreetpr) – Alcoa Inc (NYSE:AA) signed a $290 million five year contract with Spirit AeroSystems to supply aluminum sheet. With this contract, Alcoa will provide aluminum sheet products for the outside skin of an aircraft.
Growth over aerospace market
The new contract will reinforce the Company’s growth plan in the aerospace business. Even, during the first quarter of 2014, Alcoa expects that the global aerospace business will grow at a CAGR of 8% to 9% during the period of 2013-2016 due to the strong demand in large commercial aircrafts and continued growth in business jets.
In 2013, Alcoa Inc (NYSE:AA) generated revenues of $4 billion and became a market leader for aerospace fastening systems, jet engine airfoils, forging and extrusions. The Company primarily supplies these products through its downstream business – Engineered Products and Solutions (EPS). It also provides aerospace sheet and plate through its midstream business -Global Rolled Products (GRP).
During the first quarter of 2014, Alcoa generated 19% of revenue from the aerospace business through its EPS and GRP segment. Higher volumes in aerospace and commercial transportation products during the quarter provides a considerable increase for its EPS segment and, therefore, the adjusted EBITDA margin for the segment increased to 22.2% from 20.9% in the same period 2013.
Strong bonding drives future opportunity
On the other end, Spirit is famous for aerostructures designing and manufacturing. Alcoa Inc (NYSE:AA) designs products for commercial, business, regional and military aircrafts. Moreover, Sprit was a part of Boeing till 2005 and continues to build the fuselage sections of all the major categories of Boeing. So, a strong relationship with one of world’s largest aircraft manufacturers will further provide an opportunity for Alcoa to expand its offerings.
Moving forward
The long-term contracts with Spirit will strengthen the strategic partnerships and facilitate to develop in the aerospace market.
