Fed up with the delays that plague production of luxurious jetliner cabins, Boeing Co. is forming its own company with the leading seat supplier to the auto industry.

The joint venture with Adient Plc will be based near Frankfurt, Germany, along with a technology center and an initial production plant, the companies said in a statement Tuesday. It will market seats to airlines and leasing companies that are ordering new planes and retrofitting older ones.

The strategy furthers the Chicago-based planemaker’s foray into so-called vertical integration as Chief Executive Officer Dennis Muilenburg seeks to bring more work back in-house. That’s a reversal of the outsourcing that dominated its strategy a decade ago, when Boeing was building the first 787 Dreamliner.

Boeing said the Adient Aerospace venture was prompted by slow seat production and a capacity crunch that has delayed jet deliveries and frustrated airlines. United Continental Holding Inc.’s premium Polaris seats were slow to make their debut on the Boeing 777-300ER last year when Zodiac Aerospace fell behind schedule.

Closer Relationship

Adient, the leader in the $70 billion automotive seating sector, has been hinting at a closer relationship with Boeing since the companies announced a collaboration last March. Retired Boeing Vice Chairman Ray Conner, a former chief of its commercial airplane division, is a director of Adient. The Plymouth, Michigan-based company was spun off from Johnson Controls International in 2016.

Adient, with 230 plants worldwide, sees itself as a potential “disruptor” in the aircraft seating realm, Mark Oswald, vice president of investor relations said at a conference in September. “The customers aren’t excited about the current supply base,” he said. When Adient was approached, a board member “was very influential” in spurring the company to look at the opportunity, he said.

The two companies, in particular, are eyeing complex, lie-flat seats that can cost as much as a Ferrari. “The front-of-a-plane business, full-flat business class is kind of our initial entree,” Adient Chief Executive Officer Bruce McDonald said at a conference in August.

By sourcing its own parts and components, Boeing gains greater control over quality, intellectual property and high-margin aftermarket sales — the main source of profit for aerospace suppliers. The company has expanded its reach into avionics, additive manufacturing, actuators and engine covers known as nacelles.

Possible Tension

Yet the move risks adding tension to sometimes fraught relationships between Boeing and some of its largest suppliers. Safran SA, which makes engines for Boeing’s 737 Max through a joint venture with General Electric Co., is taking over Zodiac.

Rockwell Collins Inc., a long-time supplier of radio and flight displays to Boeing, last year bought B/E Aerospace Inc., the largest cabin-equipment supplier. United Technologies Corp. later struck a deal to acquire Cedar Rapids, Iowa-based Rockwell, a deal aimed at gaining bargaining clout with Boeing and rival Airbus SE.

 

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Photo Credit: Boeing, with a joint venture partner, will produce aircraft seats. Pictured are seats on a Boeing 737 MAX. Luke MacGregor / Bloomberg