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RTI has 787 profit benchmark in sight

Keywords: Tags  RTI International Metals, titanium, Boeing 787, Dreamliner, Airbus, Lockheed Martin F-35 Joint Strike Figher, Dawne S. Hickton, shipsets Frank Haflich


LOS ANGELES — RTI International Metals Inc. is approaching its profitability benchmark for the Boeing 787 Dreamliner, although it’s not yet ready to predict that it will begin making money on the much-delayed aircraft in 2013.

Chicago-based Boeing Co. has told RTI that it should continue to work on the titanium seat tracks it builds for the 787, despite the well-publicized problems the aircraft has had with its lithium-ion batteries, according to Dawne S. Hickton, RTI’s vice chairwoman, president and chief executive officer.

"In consultation with our customers at Boeing, including meetings that I attended as recently as last week in Montreal, we have been advised to proceed with our schedule to produce more than 75 shipsets this year, which is an increase of over 30 from 2012," Hickton said during a quarterly conference call with investors.

Boeing and the Federal Aviation Administration are continuing to evaluate the 787, trying to find a fix for the battery problems that have grounded the 50 Dreamliners already delivered. Boeing has a backlog of about 800 orders for the Dreamliner.

Pittsburgh-based RTI had said earlier that it would need to reach a consistent build rate of six shipsets per month in order to reach profitability on its 787 work (amm.com, Feb. 9). Like many Dreamliner suppliers, it previously expressed frustration with the program’s slow pace, which only recently began to pick up steam after falling behind its original schedule by more than three years.

However, RTI isn’t yet predicting that the increase in seat track production will make its 787 work profitable this year. RTI won’t see the full impact of Boeing’s ramp-up until the second half of this year, a company spokesman noted.

Moreover, "it’s a little early to talk profitability" on RTI’s 787 role until various issues associated with the Dreamliner—such as the batteries—are resolved, he said. He did agree, however, that this year’s planned increase represents progress.

Unlike some of its counterparts in the titanium industry, RTI’s primary role on the 787 isn’t as a supplier of mill products but as a manufacturer of seat tracks at its RTI Claro unit in Montreal. Its top customer for mill products is Boulogne-Billancourt, France-based aircraft builder Airbus SAS. Its shipments to Airbus rose to more than 6 million pounds in 2012, due in part to the inability of another supplier to provide material, and are expected to end up "a bit less" than 6 million pounds this year, Hickton said.

The Lockheed Martin F-35 Joint Strike Fighter accounted for about 2 million pounds of mill product shipments last year and is expected to account for approximately the same amount in 2013, she said.


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