Northrop Says It’s Interested in Part of Convair

Northrop is holding “early discussions” about acquiring the aircraft structures business of General Dynamics’ Convair division in San Diego, Northrop Chairman Kent Kresa said Wednesday.

Separately, Kresa said Northrop would create 2,000 jobs in El Segundo if the Navy proceeds with development of the new F-18E/F jet fighter model. Many of the workers would be transferred from existing Northrop jobs.

Kresa, speaking at Northrop’s annual shareholders’ meeting, said the Convair operation, which produces fuselages for the McDonnell Douglas MD-11 jetliner, “could fit into our long-term strategy.”

Northrop has not elaborated on the strategy, but it appears to be seeking a role as the leading producer of commercial aircraft fuselages and aft aircraft sections. It has built fuselages for the Boeing 747 since the 1960s.

Northrop signed an agreement last month to acquire a 40% interest in LTV’s aircraft business, which produces major portions of three Boeing jetliners, as well as the C-17 military cargo jet and the B-2 bomber. Under the agreement, Northrop has an option to buy the entire business after three years.

Kresa said the firm has $270 million in cash and, with its growing equity, will be able to generate $2 billion in new “financial capacity” for investments or acquisitions.

General Dynamics has said that it intends to divest the Convair division as part of an effort to focus on its core businesses. But General Dynamics has not identified potential buyers for the operation, which employs 3,500.

It was rumored that Taiwan Aerospace Corp. was discussing an acquisition, but those rumors were denied in Taiwan. A General Dynamics spokesman said that he did not have information about the Northrop talks and that the company does not comment on acquisition matters.

Kresa added that any consolidation of the aircraft operations of LTV, Convair and Northrop--if the deals are completed--is “at least three years down the road.” The firm has excess capacity at its Hawthorne operation.

In other matters, Kresa said Northrop has increased its force of security guards by 20% at its Hawthorne facility since the Los Angeles riots and has formed a crisis action group to examine other security measures.