Exclusive: Boeing to buy directly from new 737 aircraft seat maker

The Boeing logo is seen at their headquarters in Chicago, in this April 24, 2013 file photo. REUTERS/Jim Young/Files

By Alwyn Scott

NEW YORK (Reuters) - Boeing Co <BA.N> said on Monday it had picked a new aircraft seat supplier for its most popular jet, the 737, a move that industry experts said adds competition to leading seat makers Zodiac Aerospace <ZODC.PA> and B/E Aerospace <BEAV.O>.

In response to questions from Reuters, Boeing said it will buy seats directly from the new supplier, LIFT by EnCore of Huntington Beach, California - a break from the past practice of allowing airlines to purchase seats that led to some costly delays in finishing aircraft because seats did not always arrive on time.

Boeing and LIFT planned to announce their agreement on Tuesday at the Aircraft Interiors Expo in Hamburg, Germany.

Boeing said it already has 11 approved economy seat suppliers, but LIFT will be the first and only supplier selling directly to Boeing for the current 737NG and successor 737 MAX aircraft. The other suppliers sell to airlines, a process that has for decades allowed carriers to customize their respective cabins.

As plane production soared in recent years, suppliers had increasing problems delivering seats on time. The delays fouled production at Boeing and Airbus.

Last year, both plane makers took the rare step of criticizing Zodiac after missed deadlines caused plane deliveries to be delayed.

France-based Zodiac has issued several profit warnings as it failed to keep up with delivery schedules.

Boeing's shift is most likely to affect Zodiac and B/E Aerospace, which together supply about two-thirds of the global seat market worth about $4.6 billion a year, according to consulting firm AlixPartners.

"It appears Boeing is warning the two main incumbents that it isn't satisfied with their current performance," said Phil Toy, a managing director at AlixPartners.

LIFT by EnCore is a new venture that has not yet delivered a seat. But founders Tom McFarland and Jim Downey are industry veterans who sold their previous seat and interior company, known as C&D Aerospace, to Zodiac in 2005.

LIFT plans to begin delivering the new seats, known as "tourist class" in mid-2017. LIFT designed its seat in consultation with Boeing, allowing it to gear the seat's dimensions, structure and weight for the 737 and Boeing's new "Sky Interior" cabin design.

The seat width of 17.9 inches (45.47 cm) is among the widest available. It uses lightweight composite materials and includes about two dozen options airlines can configure, such as headrests, cushions, power outlets and holders for tablets and personal electronics.

Boeing said its strong supply chain and the LIFT seat would "provide customers the stability and reliability they have come to expect from the 737."

(Reporting by Alwyn Scott, editing by G Crosse)

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