Summary
The Boeing Company (BA) has filed an 8-K report detailing the completion of the sale of its Commercial Airplanes operations in Kansas and Oklahoma to Mid-Western Aircraft Systems, Inc. on June 16, 2005. This strategic divestiture includes facilities and assets in Wichita, Kansas, and Tulsa and McAlester, Oklahoma, but excludes Boeing Integrated Defense Systems operations in those locations. The transaction is expected to provide Boeing with approximately $900 million in cash, along with the transfer of certain liabilities and the establishment of long-term supply agreements designed to generate ongoing cost savings for the company. Despite the cash infusion and potential cost efficiencies, Boeing anticipates recognizing a significant pre-tax loss of approximately $350 million from this sale. The loss will be recognized in stages, with an estimated $100 million impact in the second quarter of 2005. The remaining portion of the loss, largely attributed to estimated pension and post-retirement curtailments and settlements, is expected to be recorded in the third quarter of 2005. Investors should note this divestiture as a move to streamline operations and focus on core competencies, while also being mindful of the immediate accounting impact of the sale.
Key Highlights
- 1Boeing completed the sale of its Commercial Airplanes operations in Kansas and Oklahoma on June 16, 2005.
- 2The buyer is Mid-Western Aircraft Systems, Inc., an indirect majority-owned subsidiary of Onex Partners, LP.
- 3The transaction includes facilities and assets in Wichita, KS, and Tulsa and McAlester, OK.
- 4Boeing Integrated Defense Systems operations in these locations are NOT included in the sale.
- 5The sale generated approximately $900 million in cash for Boeing.
- 6The company expects to recognize a pre-tax loss of approximately $350 million from this transaction.
- 7The loss recognition will be phased, with approximately $100 million in Q2 2005 and the remainder in Q3 2005.