Russia's Rostech in $3.5 billion Boeing 737 MAX plane deal

MOSCOW Tue Oct 30, 2012 11:33am EDT

MOSCOW (Reuters) - Boeing Co (BA.N) will sell 35 of its 737 MAX airliners to an aircraft leasing arm of Russian Technologies (Rostech) in a deal worth $3.5 billion, the companies said on Tuesday.

In addition to what would be its first sale in Eastern Europe of the newest version of its 737 single-aisle airliner, Boeing said it would continue producing titanium with Rostech unit VSMPO-AVISMA, with which it operates joint venture Ural Boeing Manufacturing.

"Russia is becoming a vital partner in everything that we do," Raymond Conner, president and CEO of Boeing Commercial Airplanes, told a news conference in Moscow. "It isn't only vital in terms of our manufacturing but it is also vital to us with respect to engineering, space, and of course services."

The Chicago-based aerospace company has been working in Russia for 30 years.

It said it would work to finalize the deal with a view to delivering the first plane to Rostech aircraft leasing unit Aviation Capital Services LLC in August 2018.

Boeing, which sources 40 percent of its titanium from Russia, also said it and Ural Boeing Manufacturing had agreed to continue research and development work on new technologies and alloys.

"Boeing forecasts that over the next 30 years it will spend as much as $27 billion on Russian titanium, aerospace design-engineering services and a variety of other services and materials," it said in the statement.

VSMPO-AVISMA supplies more than a quarter of the world's titanium market and has long-term contracts with aircraft manufacturers.

In addition to its importance as a titanium supplier, Russia is also seen as a growth aircraft market for Boeing and rival Airbus, among others.

Boeing has predicted that Russia and neighboring states will take delivery of 1,140 new aircraft over the next 20 years, valued at $130 billion.

VSMPO-AVISMA supplies more than a quarter of the world's titanium market and has long-term contracts with aircraft manufacturers. (Reporting by Gleb Stolyarov and Reuters Trainee Sonia Elks; Writing by Megan Davies and Polina Devitt; Editing by Jane Merriman and Jason Neely)