Boeing (NYSE: BA) and Russian titanium giant Vsmpo-Avisma (RTS: VSMO) announced Friday the establishment of a joint venture with an authorized capital of $60 million to assemble titanium products for Boeing passenger liners.
"Today you have started forming a joint venture to produce titanium," Putin told Alan Mullaly, president and chief executive of Boeing Commercial Airlines, on his first visit to Moscow. "We are ready to support the development of your business in Russia."
The president said that Boeing had been cooperating with Russia since 1992 and had concluded deals worth a total of $3.5 billion.
"Your company has always been a reliable partner," the president said, adding that Russia was working with Boeing on various projects, including in space.
Mullaly said he had joined the company 37 years ago and had worked to design all Boeing models, except the 707.
He said Boeing had been his dream because it was cooperating with international companies, and he wanted to work with Russia's best aircraft building companies.
Mullaly said his company invested heavily in Russia's high-tech sectors, including titanium production and aerospace industry, and 2,000 Russian engineers were helping to design Boeing airliners.
He said Boeing would buy materials worth $18 billion in the long-term under the Vsmpo-Avisma deal.
The U.S. aircraft giant said the joint venture would produce titanium aircraft parts for the medium-sized Dreamliner, which Boeing says will be able to fly distances once reserved for large jets, first in the Urals region of Sverdlovsk and then at a Boeing plant in Portland, Oregon.
Vsmpo-Avisma director general Vladislav Tetyukhin who was also attending the meeting said, "The agreement signed by Vsmpo-Avisma and Boeing develops the relationship between the two countries that began in 1996. Boeing and Vsmpo-Avisma will continue joint work aimed to increase the productivity, quality and timely supplies, as well as to reduce the prime cost of products."
Tetyukhin said Boeing had signed a contract to buy 65 types of forgings for Boeing-787s made of composite materials and titanium alloys. He said the contract could vary between $250 and $400 million depending on aircraft sales.
Tetyukhin added that 30 carriers had already bought 403 Boeing-787s and that Boeing valuated the market for this type of planes to be worth $1 trillion and planned to produce 1,500 Boeing-787s.
He also said that 10% of the plane consisted of Russian titanium parts.
Vsmpo-Avisma was established in July 2005, when Avisma (Special Aviation Materials, a Soviet-era enterprise) merged with Vsmpo (Verkhnaya Salda Metallurgical Production Association). The corporation controls a third of the global titanium market.
