Take-off time

New York, May 1 (Reuters): Boeing Co has agreed to buy aerospace parts supplier Aviall Inc for $1.7 billion as the planemaker looks to expand its services operations in the wake of a boom in new plane orders.

The deal marks Boeing’s new chief executive James McNerney’s first major corporate move. McNerney took the helm 10 months ago.

Boeing is expanding its aviation services operations as it comes off a peak in commercial plane orders. The Chicago-based company took a record 1,002 commercial plane orders in 2005, while European rival Airbus took 1,055, fuelled by a resurgence in travel worldwide.

But orders are expected to fall short of that mark this year, suggesting that over the next few years supplying parts and maintaining existing planes will become a more important part of the planemakers’ operations.

Boeing’s Commercial Aviation Services unit is expected to bring in revenue of about $3 billion this year, which would expand by more than 40 per cent with the addition of Aviall. The company had a total revenue of $55 billion last year.

Boeing said it would pay $48 per share in cash for Aviall, a 27 per cent premium to Aviall’s closing price of $37.70 on Friday on the New York Stock Exchange. Boeing said it would also take on about $350 million of Aviall debt.

The deal, set to close by the end of September, would not affect Boeing’s earnings this year, but add to its earnings next year, the company said.

Aviall shares jumped 25 per cent to $46.91 in early trading on Monday, while Boeing shares rose 39 cents to $83.87.

Dallas-based Aviall, with an annual revenue of about $1.3 billion, is the world’s leading independent distributor of new aviation parts to the aerospace, defence and marine industries worldwide.

The company will become a part of Boeing’s Commercial Aviation Services unit, which maintains the airline’s inventory of maintenance supplies ? including spare parts ? providing items only as needed, with the aim of cutting cost for airlines.