Boeing and Volvo Aero reach agreement on exclusive sale of Boeing's spare parts

BOEING AND VOLVO AERO REACH AGREEMENT ON EXCLUSIVE SALE OF BOEING'S SPARE PARTS Boeing and Volvo Aero have reached an agreement under which Volvo Aero, through its American company The AGES Group, is granted exclusive rights to market and sell new spare parts to the fleet of Boeing aircraft on the world market. The agreement covers surplus material, in this case components no longer needed within aircraft production and which are no longer included in Boeing's spare parts range. The AGES Group, which trades in aircraft engines and aircraft components and leases aircraft engines, will use is global sales force to market and sell spare parts for Boeing aircraft to airlines and maintenance centers throughout the world. The agreement means that Boeing and AGES share the revenues from the components sold. Initially, the agreement covers a five-year period, with the possibility for Volvo Aero to extend it by another five years at the end of the period. The exclusive sales right covers about 230,000 item numbers, primarily for Boeing aircraft which are no longer being produced. The spare parts inventory will now be moved from the Boeing Spares Distribution Centers in Seattle, Washington and Torrance, California to a warehouse in Kent, Washington, for which AGES is responsible, not far from the international airport in Seattle. Boeing's own spare parts sales are currently carried out mainly on the Internet. The AGES Group will be linked to Boeing's home page, which will provide the partners the opportunity to optimize sales. The components being sold are factory new and retain their certification from the U.S. aviation authority, the FAA. "This is a long-term agreement, which provides the opportunity to reduce our inventories while concurrently creating a possibility for us to increase revenues through utilizing The AGES Group's excellent sales and marketing network to sell our surplus material," says Darce Lamb, Vice President Airline Logistics Support at Boeing Customer Services. "Through permitting AGES' experienced sales force to market our spare parts, we increase accessibility for our customers. Concurrently, at Boeing we can focus our resources on our main spare parts operations," says Lamb. "The cooperation with Boeing strengthens our position as a leading supplier of service to the aviation market," comments Fred Bodin, President of Volvo Aero. "The agreement fits well into our strategy for continued growth by providing us with a possibility to offer a broader product range for the after-market." Volvo Aero has held an ownership interest in AGES since 1992. Ownership has increased successively and at the beginning of March 1999 it increased to 86.4%. In 1998, AGES had sales of SEK 2.8 billion, corresponding to 32.6% of Volvo Aero's sales of SEK 8.6 billion. Boeing is the world's largest company in the aviation industry. In addition to commercial aircraft, Boeing manufactures combat aircraft, missiles and space vehicles, including the U.S. space shuttle. After the acquisition of McDonnell Douglas, Boeing accounts for 80% of the existing fleet of commercial aircraft in the world. The company reported sales in 1998 of SEK 480 billion. Boeing has about 200,000 employees. April 23, 1999 For further information, contact: Mauritz Ljungman, +46 70 594 48 53, or +46 520 94 424. Dick Schleh, Boeing +1 206 544 9528. Caroline Harris, Boeing, +32 2 777 0747. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/23/19990423BIT00270/bit0001.pdf http://www.bit.se/bitonline/1999/04/23/19990423BIT00270/bit0002.doc