Boeing has dropped its objections to a proposed merger of United Technologies Aerospace Systems and Rockwell Collins after completing long-term agreements on cost reductions with its suppliers.

“As part of the agreements, we have provided consent to their transaction under our contracts,” Boeing says.

Boeing’s consent removes a potential legal and commercial barrier to the combination of United Technologies’ Tier 1 aircraft systems supplier with the avionics and interiors portofolio of Collins.

UTC reached an agreement with Collins’ board of directors last September on a $30 billion acquisition deal. The merger remains pending as regulators in the USA and Europe review the antitrust implications.

UTC proposed the merger just as Boeing had launched a second round of cost reduction negotiations with suppliers under the “partnership for success” programme.

“Following productive discussions with United Technologies and Rockwell Collins, Boeing has reached win-win agreements with each of them that bring value to our customers and support our companies’ competitiveness,” Boeing says.

Boeing launched the partnership for success programme in 2011 as part of an effort to lower costs and raise profits across the supply chain. At the same time, Boeing is pushing into markets for services and avionics that it previously outsourced.

The proposal to merge UTAS and Collins was widely seen as UTC’s reaction to Boeing’s efforts to put more pressure on suppliers to lower costs.

“Boeing’s interests and those of our customers, employees and other stakeholders are in ensuring the long-term health and competitiveness of the aerospace industry supply chain,” the company says. “At a time of record industry production, it is critically important that we have business arrangements with all of our suppliers that drive increased focus on meeting their cost, schedule and quality commitments to Boeing and our customers.”

Source: Cirium Dashboard