Boeing Hopes To Close Acquisition Of Mcdonnell Douglas By August
The Boeing Co. should complete its purchase of McDonnell Douglas Corp. by August even as an antitrust investigation in Europe appears set to be extended next week, the company’s chairman said.
Phil Condit, chairman and chief executive of the Seattle-based company, wrapping up a whirlwind, weeklong tour of Europe, said he had met with the European competition commissioner earlier this week and felt the antitrust inquiry under way wouldn’t hinder the merger.
“I think that both the Federal Trade Commission in the U.S. and the European Commission are on similar timetables that will probably lead to a July-August approval and closure” of the merger, he said.
Condit declined to disclose any details of his talk with Competition Commissioner Karel Van Miert.
But he said the “horizontal” nature of a Boeing-McDonnell Douglas merger - that is, combining complementary businesses rather than Boeing’s swallowing up key suppliers for a “vertical” integration, meant there were few areas of overlapping operations to set off alarms with regulators. Condit said his trip to Europe - which included stops in Brussels, London, Cologne, Paris and Amsterdam - had been scheduled many months before the merger was planned, so it wasn’t put together as a lobbying effort to persuade Europeans that a Boeing-McDonnell Douglas merger wasn’t a threat to European industry.
At a briefing with journalists in Paris, Condit addressed a broad range of issues, talking about the prospect for plane orders for the next few years, Asia’s aerospace ambitions, Boeing’s plans for expansion, its increasing internationalization and other issues.
Asked about Boeing’s decision not to build a plane that could carry 600 passengers or more, Condit reiterated that even though some airlines including British Airways Plc and Singapore Air clearly needed such planes, such a project wouldn’t be economically viable for Boeing, and wouldn’t be pursued.
British Airways earlier this week chided Boeing for dropping plans to develop a bigger version of its 747, saying that larger aircraft are the only way for airlines to grow.
“We agree with BA, it is an important airplane,” he said.
“It’s just that we don’t think that market in total is very large, so therefore I don’t think we can make a business case for Boeing that it makes sense,” he said.
As for a 100-seat plane, he said Boeing was still evaluating how and when to develop such a program. Boeing has been talking with the Japanese for several years about jointly building a 100-seater and said such talks continue, “but we need to assess all the options.”
He noted that McDonnell Douglas last year launched a 100-seat plane, the MD95. ValuJet Inc. has ordered 50 of those planes for $1 billion, with the first deliveries scheduled for June 1999.
Condit said he couldn’t answer now whether Boeing would decide to go ahead with production of that plane, saying such a decision would have to be taken after the merger.