The deal for Tital, announced Monday, brings Alcoa a specialist in titanium and aluminum structural castings for aircraft engines and airframes. Klaus Kleinfeld, Alcoa's chairman and CEO, told TheStreet's Jim Cramer during CNBC's "Squawk on the Street," "We're adding more titanium and bringing our commodity business down."
Alcoa shares are up less than 1% on the news. The stock is up 41% on the year to date, outpacing both the 7.7% gain in the S&P 500 and the 3.3% gain in the Dow Jones Industrial Average.AA data by YCharts
Alcoa has been building on its aerospace expertise, in June buying Firth Rixson, a U.K.-based maker of jet-engine components for $3 billion. This was a great move for Alcoa at a time when it was battling a global slowdown in aluminum demand and weak pricing. Firth's position as the world’s largest supplier of seamless rings for aero-engines gave Alcoa an additional source of revenue with its rings and metal products business.
Even before announcing the acquisition Alcoa had projected a 7% compounded annual growth rate through 2019 for commercial jets. The company sees nine-year production order book to return to 2013 delivery levels. Tital will help Alcoa exploit that growth, while at the same time helping it leverage its Firth deal.