Boeing, VSMPO-Avisma Create Titanium Joint Venture

Boeing Co. (BA), the world's second-largest commercial planemaker, and OAO VSMPO-Avisma, (VSMO) the biggest titanium producer, agreed to a 20-year joint venture to make metal parts as global aircraft demand increases.

Ural Boeing Manufacturing will make 800 tons of titanium forgings a year, VSMPO Chief Executive Officer Vladislav Tetyukhin told reporters today at the Moscow Air Show. VSMPO and Chicago-based Boeing said last year they planned to create a 50-50 joint venture for the machining of the metal.

The unit, based in the Ural Mountains city of Verkhnaya Salda, will start production in August or September next year, Tetyukhin said. The company will manufacture titanium components for Boeing's 787 Dreamliner passenger plane.

Boeing and larger rival Airbus SAS (EAD) need more titanium as global air travel grows. In June, Boeing raised its 20-year forecast for world jetliner deliveries by 5.2 percent to 28,600 aircraft.

Until today's agreement, VSMPO supplied 35 percent of Boeing's titanium. The company meets 65 percent of Airbus's needs for the metal.

VSMPO titanium production is expected to reach 27,600 tons this year, with sales at $1.2 billion, Tetyukhin said. VSMPO plans to boost output to 47,000 tons a year in 2012.

Boeing has more than 1,400 engineers under contract at its design center in Moscow, including 400 who work on the Dreamliner program. The company is a consultant to OAO Sukhoi Civil Aircraft Co. on the SuperJet-100 mid-range passenger aircraft and works with Russia on the International Space Station.

More than 780 domestic and foreign producers from 110 countries are participating in the biennial air show, Russian President Vladimir Putin said today as he opened the event at the once-secret Zhukov airfield near the capital.

Airbus, based in Toulouse, France, has delivered 269 planes this year and Boeing has shipped 253, according to figures from the companies as of Aug. 9.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

To contact the editor responsible for this story: Lars Klemming at at lklemming@bloomberg.net

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