Boeing (NYSE: BA) and French engine manufacturer Safran have agreed on Monday to create a joint venture to build and service Auxiliary Power Units (APUs).
The joint venture will allow the two to compete against to aerospace manufacturers like United Technologies (NYSE: UTX) and Honeywell (NYSE: HON). The two will specialize in creating an engine and add to Boeing’s wide range of commercial aircrafts.
The APU market is controlled entirely by United Technologies and Honeywell. Both companies have manufactured and expanded products and services in the market as they sell the APUs to airlines.
An APU is an onboard engine that is used to primarily start the main engines and power the aircraft’s systems on the ground, and if necessary, in flight.
Boeing and Safran will both maintain a 50 percent stake in the partnership, which will be based within the U.S.
"This strategic partnership will leverage Boeing's deep customer and airplane knowledge along with Safran's experience in designing and producing complex propulsion assemblies to deliver expanded, innovative services solutions to our customers," said Stan Deal, President and CEO, Boeing Global Services.
Boeing’s joint venture comes shortly after announced to acquire defense company KLX (NASDAQ: KLXI).
Boeing or Safran did not announce when the joint venture will begin. Boeing also did not disclose the amount it will invest. The deal is expected to close in the second half of 2018.