Boeing Offset Deal Builds South African Aero Industry

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Researched by Industrialinfo.com (Industrial Information Resources Inc.; Houston, Texas). A deal made by South African aviation and engineering group Aerosud with Boeing to manufacture parts for a range of the US aerospace company's aircraft is estimated to be worth in excess of $100 million. The deal is part of an offset agreement made when SA Airways (SAA) purchased 21 Boeing 737-800's valued at $430 million. The deal will see the South African company gaining in the transfer of production technology, capital equipment, and job creation over the ten-year span of the agreement.

Boeing is locked in competition with Europe's Airbus for the upcoming upgrade of SAA's long haul fleet, which will form a part of the 80% increase in Africa's commercial aircraft complement over the next 20 years, which will see the total move from the present 664 aircraft to around 1,200. The world average growth rate over the next 20 years is projected to be 4.7% per annum with Africa's traffic growth topping this at 5.2%. The award of the long haul contract will lead to further offset development deals with local manufacturers by the winning company.

Boeing has also allocated maintenance and modification work to SAA and has forged a strategic partnership agreement with the South African government to develop the local aviation industry.