McDonnell Douglas, Boeing announce merger plan
Deal would create world's largest aerospace company
December 15, 1996
WASHINGTON (CNN) -- Boeing and McDonnell Douglas announced plans Sunday to merge into the world's largest aerospace company, to be known as The Boeing Company.
Top executives of the two companies made the joint announcement just two weeks after agreeing to a corporate cooperation on development of wide-body jets.
"This is an historic moment in aviation and aerospace," said Phil Condit, Boeing's president and chief executive officer. "Together I believe we can forge a balanced and capable company for the future." (244K/22 sec. AIFF or WAV sound)
"This is not only a great merger, it's a great time for a merger," said McDonnell Douglas President and Chief Executive Officer Harry Stonecipher. "The commercial airline market is growing at a rapid pace. We happen to have unused facilities that can help that." (264K/23 sec. AIFF or WAV sound)
Stonecipher is slated to be the new company's president and chief operating officer, while Condit will be tapped as chairman and chief executive officer. The new company's worth would be in the neighborhood of $48 billion.
The stock-for-stock merger, which will require federal approval, joins two aerospace industry giants who have been almost constant competitors for both commercial and defense industry contracts.
McDonnell Douglas has gotten the short end of the stick in recent times, losing a much-sought-after Pentagon contract for the radar-evading joint strike fighter and seeing commercial jet orders drop. The company abandoned plans to develop the MD-XX, a wide-body derivative, and other long-range commercial planes.
Boeing, on the other hand, has seen an increase in orders for its commercial planes and has made some inroads into the defense field. The Pentagon tapped Boeing and Lockheed Martin as the finalists for the joint strike fighter contract, and Boeing will head a team to develop a 747-mounted flying laser to counter short-range ballistic missiles.
Additionally, Rockwell International -- developer of the B-1 bomber and the space shuttle -- has agreed to sell the bulk of its aerospace and defense business to Boeing.
But a backlog of commercial jet orders prompted the December 3 agreement with McDonnell Douglas to cooperate on Boeing's 747-500 and 600 series jetliners. Boeing is behind on 1,300 orders -- up 20 percent over last year.
Boeing, with 120,000 employees and annual revenues exceeding $19.5 billion, is based in the Seattle/Puget Sound area of Washington state. Boeing, established in 1916, is ranked among the top three exporters in the United States.
McDonnell Douglas, with 63,000 employees, was created in 1967 by the merger of the McDonnell Company and Douglas Aircraft. McDonnell Douglas is headquartered in St. Louis with major facilities in St. Louis; Long Beach, California; Huntington Beach, California; and Mesa, Arizona.
Correspondent Carl Rochelle andReuters contributed to this report.
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