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Aviation History
1997
1997 - 0022.PDF
fl-V/Z ANALY&JZ Combined, Boeing and McDonnell Douglas will become the world's largest manufacturer of combat and commercial aircraft. GRAHAM WARWICK/ATLANTA BOEING'S $13.3 billion McDonnell Douglas (MDC) acquisition will make the company the world's largest manufacturer of military, as well as commercial, aircraft. While Lockheed Martin will remain the number one US defence contrac tor, Boeing will take up and expand MDC's mantle as the leading pro ducer of combat aircraft. The merger will also boost the com bined company's position in the space market and add weight to its missiles business. Boeing already has a major stake in the Lockheed Martin-led F-22 and half shares in the Bell Boeing V-22 and Boeing Sikorsky RAH- 66, as well its own Airborne Warning and Control System and CH-47 programmes. It recently won the Airborne Laser develop ment and Joint Strike Fighter (JSF) demonstration contracts. Its just- completed Rockwell acquisition brought with it responsibility for theB-lB. Now the xMDC acquisition will add the F-15, F-18, AV-8B, AH-64, T-45 and C-17 pro grammes to Boeing's military-air craft portfolio. If the "traincrash" in US tactical-aircraft programmes occurs, as has been widely predict ed, Boeing will be uniquely chal lenged as itwill have major stakes in all three fighter programmes which are regarded as competing for US Department of Defense (DoD) funds — the F-18E7F, F-22 andJSF. Any or all of the three pro grammes could be stretched and slowed, and production numbers reduced. Already the F-22 partners are being asked to find unit-cost reductions to avert a potential S13 billion overrun on the US Air Force's 438-aircraft production programme, and questions are being asked about the Navy's need for 0)00 F-18E/Fs. The October loss of the 3,000- aircraft JSF programme proved instrumental in MDC seeking a merger partner. By early December, the company was preparing a bid for Hughes Aircraft, and Boeing realised that it had to move fast. The idea of a merger was refloated by Boeing chairman Phil Condit at an unscheduled board meeting. The MDC board was informed of the offer and, on 10 December, MDC president Harry Stonecipher flew to Seattle armed with agreed "rules of engagement" for a possible deal. Later that day the companies agreed to merge, and the deal was sealed by Condit and Stonecipher. Boeing offered $63, in Boeing stock, for each MDC share, valu ing the deal at $13.3 billion and promised Stonecipher — the first xYIDC president appointed from outside — die position of Boeing's president, left conveniently vacant by the announcement that Condit would become chairman in 1997. The merged company will employ 200,000 people and is claiming annual sales of $48 billion in 1997. DoD reaction to the merger has so far proved positive, although it FLIGHT INTERNATIONAL 1 - 7 January 1997
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