Alcoa (NYSE:AA) is flying high with its latest supply deal. The company announced that it and Airbus, the manufacturing subsidiary of European aerospace giant EADS (NASDAQOTH:EADSY), have signed a multi-year supply agreement worth around $110 million. The deal will see the American firm provide value-added titanium and aluminum parts for use in several models of Airbus jets.
Alcoa said it will produce the goods at its plant in Cleveland. The company recently updated a 50,000-ton press in the facility, describing it as "state-of-the-art" and saying that it is "uniquely capable of producing the world's largest and most complex titanium, nickel, steel and aluminum forgings."
The titanium parts will be used in Airbus' planned A320neo to connect the wing structure to the engine. The aluminum forgings are to be utilized for various purposes in the A330 and A380 models.
The contract is an extension of a series of supply agreements signed in 2012 between the two companies, valued at a total of roughly $1.4 billion. Those arrangements cover aluminum sheet, plate, and hard alloy extruded products.
Although the aerospace industry has been shifting to composite materials recently, proponents believe that parts made of more traditional metals are easier to produce and maintain.
Fool contributor Eric Volkman has no position in any stocks mentioned. Nor does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.