Aluminum giant Alcoa Inc. (AA) announced that it has signed multi-year agreements with Airbus for virtually all Airbus commercial programs, including models like A320, A350 and A380. The deal is valued at approximately $1.4 billion.
Per the deal, Alcoa will provide Airbus with aluminum sheet and plate, and aluminum lithium alloys for manufacturing aircraft. A number of Alcoa’s facilities will be utilized in executing the deal.
Moreover, Alcoa’s plants in Lafayette, Indiana, Halethorpe in Baltimore and Hannover in Germany will supply hard alloy extruded products. Flat rolled products will be supplied from the company’s plants in Davenport, Iowa, Kitts Green, England and Belaya Kalitva, Russia.
Airbus is the world’s leading aircraft manufacturer and relies on industrial co-operation and partnerships with major companies all over the world. Alcoa has been in the aerospace market and is famous for its innovations that have been major milestones for the aerospace industry.
Few days back, Alcoa released its second-quarter 2012 results. The company posted a loss of $2 million (break-even on a per-share basis) in the quarter due to lower aluminum prices compared with a profit of $322 million (or 28 cents a share) in the year-ago quarter. Excluding one-time special items (including restructuring and other charges, litigation expenses and tax-related items), Alcoa earned 6 cents a share in the quarter, in line with the Zacks Consensus Estimate and below the year-ago earnings of 32 cents.
Revenues decreased 9.4% year over year and 0.7% sequentially to $5,963 million, surpassing the Zacks Consensus Estimate of $5,828 million. Though weak aluminum prices dragged down revenues, the company witnessed increased demand across aerospace and automotive markets in the quarter. Aluminum prices dropped 18% year over year and 4% sequentially in the second quarter of 2012.
Alcoa witnessed strong performances across all its businesses during the quarter, driven by higher utilization rates, process innovations, lower scrap rates and usage reductions. The company expects higher demand for aluminum from automobile, aerospace, packaging and commercial transportation end markets in the near-term.
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