September 11, 2014 / 1:08 PM / 4 years ago

Alcoa signs Boeing deal worth more than $1 billion

An Alcoa aluminum plant in Alcoa, Tennessee is seen in this April 8, 2014 file photograph. REUTERS/Wade Payne/Files

(Reuters) - Alcoa Inc (AA.N) has signed a long-term contract to supply planemaker Boeing Co (BA.N) with aluminum sheet and plate that is worth more than $1 billion, the metals company said on Thursday.

The new contract is the largest ever between the two companies, said Alcoa, a longtime Boeing supplier. It did not disclose a precise value or time frame for the deal.

Alcoa has been expanding its aerospace business and announced a $2.85 billion deal in June to buy jet engine part maker Firth Rixson.

Although it helped create the modern aluminum industry more than a century ago, Alcoa is eager to produce higher-margin, specialized parts for aerospace and automotive customers, even if they contain other metals or no aluminum at all.

Alcoa said the agreement announced on Thursday “establishes a foundation for continued collaboration” on new alloys, including aluminum-lithium.

The deal makes Alcoa the sole supplier of wing skins for Boeing airplanes that have a metallic structure.

Boeing Chief Operating Officer Dennis Muilenburg told the Reuters Aerospace and Defense Summit that Alcoa had been very responsive in helping Boeing deal with sharp increases in demand for commercial airplanes.

He said the deal announced Thursday was part of the company’s broader “Partnering for Success” initiative to get substantial discounts from its regular suppliers.

“This is something that’s good for Boeing, it’s good for Alcoa,” Muilenburg added.

Reporting by Allison Martell in Toronto.; Addiitonal reporting by Victoria Walker in Washington; Editing by Jeffrey Benkoe and Andre Grenon

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