Odd Couple Airbus Partner British Aerospace To Manufacture Parts For Boeing 737 Wings

British Aerospace Plc, one of four partners in European planemaker Airbus Industrie, said it will supply wing parts for Boeing Co.’s 737 jetliner in an accord that puts BAe in the unusual position of aiding a rival.

BAe spokesman Simon Raynes said the company signed an eight-to 10-year contract to make some wing parts for the latest models of the 737 at its Chadderton factory near Manchester, England. He wouldn’t say how much the contract is worth.

Analysts said the agreement is important for Boeing because the U.S. planemaker needs more suppliers to help cope with parts shortages amid a boom in aircraft orders.

“BAe clearly has one of the most efficient aerospace manufacturing operations around the world and Boeing has cited BAe as having industry-leading efficiency for some time,” said Chris Avery, an analyst at Paribas Capital Markets.

Shares in both companies fell in declining markets. Boeing shares dropped 62-1/2 cents to $49.50, while British Aerospace shares fell 15 pence to 15.73 pounds ($26.58) in London.

Airbus brushed aside any concerns about BAe’s move.

“It is essentially a BAe issue, and as far as we’re concerned it’s business as usual for Airbus,” said David Velupillai, a spokesman for the Toulouse, France-based group.

BAe and Boeing said that the agreement is typical in an industry where rivals for major contracts often supply each other with parts on other projects. They said BAe has sold parts to Boeing in the past, though they couldn’t cite any specific examples.

“Going back and forth like that is really no big deal,” said Boeing spokesman Craig Martin. He noted that Spain’s Construcciones Aeronauticas SA, another Airbus partner, has also been a subcontractor to Boeing.

Raynes said BAe won’t do any design work on the new models itself and will simply build the wing parts on a “build-to-print” basis for Boeing.

Analysts said the agreement could have wider ramifications for both companies. For BAe, which also builds wings for Airbus jetliners, the pact “is a vote of confidence from Boeing,” said Zafar Khan of SGST Securities in London. “This will cement their position as the premier wing structures company.”

He said Boeing could also reap some political benefits from the agreement. European Union regulators criticized the U.S. planemaker for threatening jobs in the EU during the acrimonious battle over its purchase of McDonnell Douglas Corp. Boeing can now cite the BAe work as a high-profile example of how it supports European jobs.

“It’s a deal that works very well for Boeing from a political standpoint,” Khan said.

Airbus, founded in 1970, is the world’s second-largest maker of civil aircraft after Seattle-based Boeing. Daimler-Benz Aerospace AG of Germany and France’s Aerospatiale SA each own 37.9 percent, British Aerospace owns 20.0 percent and Construcciones Aeronauticas holds the remaining 4.2 percent.

Boeing rolled out the 737-700, the first of three longer-range models of its most popular aircraft, last December. The new 737 models are intended to keep its edge against Airbus in the market for planes seating 100 to 200 people - the bulk of most airlines’ fleets.

The Independent newspaper in London reported the agreement between BAe and Boeing Monday.