Alcoa buys German titanium aircraft parts maker

Spanish Market: Metals, Petroleum coke
15/12/14

Aluminium producer Alcoa today said it will expand its downstream aluminium production business by acquiring the German aerospace business Tital.

The move expands US-based Alcoa's aluminium casting capacity and establishes titanium casting capabilities in Europe to produce advanced jet engine components used on large commercial aircraft. Alcoa did not disclose financial details of the transaction.

The deal is the latest in Alcoa's strategy to slash its primary aluminium smelting capacity to cut costs and move its operations into the more-profitable downstream, or secondary, aluminium business. In its primary metals business, Alcoa has curtailed, closed or sold 1.3mn t, or 31pc, of its highest-cost global smelting capacity since 2007. Alcoa now has a global smelting capacity of 3.5mn t/yr.

Germany-based Tital makes titanium and aluminium structural castings for aircraft engines and airframes. Alcoa estimates Tital's revenues from titanium will increase by 70pc over the next five years "as manufacturers of next-generation jet engines look to titanium solutions for engine structural components" as "a lighter-weight alternative to steel."

"As a fast-growing innovator, Tital will increase our share of highly differentiated content on the world's best-selling jet engines," Alcoa chief executive Klaus Kleinfeld said.

Tital has established connections to European engine and aircraft manufacturers such as Airbus, SNECMA and Rolls-Royce. In 2013, the company generated revenues of about €71mn (US$96mn), more than half of which came from titanium products. Alcoa projects Tital's order book will last for the next nine years, assuming 2013 delivery rates.

The transaction, which both companies have approved, remains subject to closing conditions and regulatory approvals. Alcoa expects to get all the regulatory clearances and close the transaction in the first quarter of next year.

Tital employs more than 650 people, primarily in Bestwig, Germany.

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