Deal will see Spirit AeroSystems pay US$160 million to Pennsylvania-based Triumph Group to take over contract work
BERWYN, Pa.—Spirit AeroSystems Inc. has transferred wing manufacturing operations for Gulfstream Aerospace Corp. from its plant in Tulsa, Okla., to Pennsylvania-based Triumph Group, Inc. at a loss of as much as US$235 million.
Under terms of the agreement, Spirit AeroSystems will pay US$160 million cash and transfer assets required to run the operations to Triumph, which will in turn take over production of the Gulfstream G650 and G280 wing programs.
Spirit, which said the move to shed the contract was part of its restructuring efforts, said employees working on the Gulfstream programs will be offered positions with Triumph.
As part of the deal, production will continue out of Spirit’s Tulsa facility under Triumph management.
Triumph does not have operations in Oklahoma.
Spirit AeroSystems president and CEO Larry Lawson said management is “taking a pause” to evaluate the remaining work conducted in Tulsa, and whether it will look to shed those operations.
“There are a number of factors to take into consideration, including exploring our options within the community and with other constituents who have approached us,” he said in a statement from his company. “We won’t rush the evaluation and will provide an update as soon as we are ready.”
Triumph said it expects the deal to be cash flow negative initially, moving to positive by the fourth year.
The deal is expected to add approximately US$250 million in annual revenue to Triumph’s books, while generating a cash tax benefit of approximately US$220- to US$230 million for Spirit AeroSystems.
With the deal, Triumph will supply wings to four of Gulfstream’s five aerospace programs currently in production.
“We are pleased with this agreement, which is important to the successful development of our G650 and G280 business jet programs,” said Gulfstream president Larry Flynn in a statement released by Triumph. “We know Triumph well based on our experience with them on the G450 and G550 wings and have confidence that their knowledge and capabilities make them the right partner to take on these programs.”
The transaction is expected to close by the end of December.