Magellan Aerospace to Invest up to $120 Million to Support JSF Work in Winnipeg



    TORONTO and WINNIPEG, Sept. 2 /CNW/ - Magellan Aerospace announced today
that it plans to invest up to $120 million (Cdn) in its Winnipeg Bristol
Aerospace plant to facilitate work on the Joint Strike Fighter (JSF) program.
The Canadian Government's Strategic Aerospace and Defence Initiative (SADI)
program is providing repayable cash-flow support of up to $43.4 million (Cdn)
for technology and process development. The investments commence this quarter
and will be made over a period of five to seven years as the program delivery
rate ramps up to full-scale production. The SADI participation supports the
development of new manufacturing and process technology for composite and
metallic materials for the multi-national JSF F-35 Lightning II aircraft.
    Jim Butyniec, Magellan CEO, discussed the importance of participation on
the JSF program: "The JSF is a game-changing program due to its size, its
advanced technology, and most importantly for Magellan, its manufacturing and
process technology. We are pleased that the Canadian Government, through the
SADI program, is able to provide Magellan Winnipeg-Bristol Aerospace division
with critical assistance in meeting the technology investments required to
launch this program. We are also investing in capability for the JSF program
in other Magellan locations, and we have been in discussions with various
levels of Government in the areas of training and sophisticated tooling, both
in Manitoba and Ontario." The balance of the funding for these investments
will be met by applying a portion of Magellan's annual capital budget over the
five to seven years of the program buildup.
    Lockheed Martin is developing the F-35 with its principal industrial
partners, Northrop Grumman and BAE Systems. The F-35 is a supersonic,
multi-role, 5th generation stealth fighter. Three F-35 variants, derived from
a common design, developed together, and using the same sustainment
infrastructure worldwide, will replace at least 13 types of aircraft for 11
nations initially, making the F-35 the most cost-effective fighter program in
history. Two separate, interchangeable F-35 engines are under development: the
Pratt and Whitney F135; and, the GE Rolls-Royce Fighter Engine Team F136.
    Magellan has been manufacturing low quantities of components and
assemblies of the JSF program for five years as the aircraft has progressed
through test articles, prototypes, and low rate production stages, including
initial work on the two engine candidates. As a result Magellan considers
itself to be well positioned to secure future contracts for participation in
the JSF programs related to the F-35. "The precision required for components
and assemblies has advanced the manufacturing technologies to a new level of
performance," said Don Boitson, Magellan's Vice President and General Manager
of the Winnipeg facilities. "We have benefitted through material testing in
our Winnipeg labs, and through collaboration with the Winnipeg-based
Composites Innovation Centre. We have also received outstanding assistance
from our customers. The program prime contractor, Lockheed Martin of Fort
Worth, Texas, has been engaged throughout the initial phases and we look
forward to growing this relationship as the program matures."
    In particular, Magellan has entered into contracts with Pratt and Whitney
and Rolls-Royce for initial engine work. The F135 fan sync ring and the F136
front frame are critical hardware that requires advanced machining
capabilities and strict quality standards. Magellan has also entered into
letters of intent with each of BAE Systems and Lockheed Martin in relation to
the production of two major assemblies on the aircraft, and is pursuing
additional participation in engine production and after-market support. Based
on current estimates for the scope of the JSF program and the status of its
discussions with Lockheed Martin and BAE Systems, Magellan management
estimates that the scope for deliveries by Magellan of aircraft and engine
components over the next 25-30 years as a result of the JSF program could be
as much as $3 billion (US), with revenues of up to $120 million (US) per year
once full rate production is achieved.
    The estimate of deliveries over the next 25-30 years is subject to a
number of assumptions and risks, including that the JSF program for the F-35
aircraft continues and is not delayed, and that final contractual
relationships are established between Magellan and its customers. For more
details on the assumptions, risks and uncertainties relating to such
estimates, see "Forward-Looking Statements" at the end of this press release.

    About Magellan Aerospace Corporation:

    Magellan Aerospace Corporation is one of the world's most integrated
aerospace industry suppliers. Magellan designs, engineers, and manufactures
aeroengine and aerostructure assemblies and components for aerospace markets,
advanced products for military and space markets, and complementary specialty
products. Magellan is a public company whose shares trade on the Toronto Stock
Exchange (TSX: MAL), with operating units throughout Canada, the United States
and the United Kingdom.

    Forward-Looking Statements:

    This press release contains forward-looking statements to provide
investors and potential investors with information about the impact or
possible impact of the Joint Strike Fighter (JSF) program related to the F-35
Lightning II aircraft on the business of Magellan. Readers are cautioned that
the information may not be appropriate for other purposes.
    In regard to such forward-looking statements contained in this press
release, we have made assumptions regarding, among other things, our ability
to leverage our participation in the initial low-rate production stages of the
JSF program into long-term contracts, our ability to reach long-term contracts
with BAE Systems and Lockheed Martin (which are both progressing from the
letter of intent stage) for our participation in the JSF program, the
continuance of the JSF program as currently scheduled, the continuance of any
contractual relationships of Magellan relating to the JSF program and
Magellan's percentage share of production for various components to be
delivered under the JSF program.
    Although Magellan believes that the estimates or expectations reflected
in the forward-looking statements, and the assumptions on which they are made,
are reasonable, there can be no assurance that such estimates and expectations
will prove to be correct.
    Readers are cautioned not to place undue reliance on forward-looking
statements included in this document, as there can be no assurance that the
plans, intentions or expectations upon which the forward-looking statements
are based will occur. By their nature, forward-looking statements involve
numerous assumptions, known and unknown risks and uncertainties that
contribute to the possibility that the expectations and estimates of
management will not occur, which may cause Magellan's actual performance and
financial results in future periods to differ materially from any estimates or
projections of future performance or results expressed or implied by such
forward-looking statements. These risks and uncertainties include, among other
things: the risk of the termination of the JSF Program or delay in its
implementation; the failure of Magellan to secure firm contracts for
participation in the JSF program or delays in orders under any contracts, or
termination of such contracts; competition from other suppliers in securing
such contracts and other risks disclosed in Magellan's annual filings
(including our Annual Information Form) available at www.sedar.com. Readers
are cautioned that this list of risk factors should not be construed as
exhaustive.
    The forward-looking statements contained in this document speak only as
of the date of this press release. Except as expressly required by applicable
securities laws, Magellan does not undertake any obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. The forward-looking statements
contained in this document are expressly qualified by this cautionary
statement.

    %SEDAR: 00002367E




For further information:

For further information: John Dekker, Vice President Finance, Magellan
Aerospace Corporation, Tel: (905) 677-1889 Ext 224, E:
john.dekker@magellan.aero; Bill Matthews, Vice President Marketing, Magellan
Aerospace Corporation, Tel: (905) 677-1889 Ext 222, E:
bill.matthews@magellan.aero


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