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Alcoa to spend $2.85B on jet engine parts maker

By WTOP Staff

TOM MURPHY
AP Business Writer

Alcoa is delving deeper into the aerospace industry, spending nearly $3 billion to acquire the British jet engine component company Firth Rixson.

The Pittsburgh company said Thursday that the deal will boost annual aerospace revenue by 20 percent, to about $4.8 billion, as the company continues to turn its focus away from its mining and aluminum smelting roots.

Company shares rose more than 2 percent while broader indexes slipped.

Alcoa will pay $2.35 billion in cash and $500 million in stock to Firth Rixson’s current owner, the private equity firm Oak Hill Capital. It also may spend an additional $150 million based on pre-set performance targets.

Firth Rixson products include jet engine parts like turbine and compressor cases. The company brought in $1 billion in revenue last year, mostly from the aerospace industry, and sales are expected to grow 12 percent annually through 2019, according to Alcoa.

The high cost of producing aluminum and falling prices for the metal have hurt Alcoa Inc. and pushed it toward more finished products that are used in aircraft, autos and other goods.

In April, the company reported quarterly losses of $178 million. Aluminum prices haven’t recovered since the recession and Alcoa has been idling smelters to reduce capacity and cut costs.

At the same time, Alcoa is shifting sideways toward components.

The company last month revealed that it would spend $100 million to build factory in Indiana to make nickel-based engine parts for commercial airliners. With fuel prices rising, demand for more fuel-efficient planes has soared. Alcoa has said it expects the aerospace industry to grow by 8 percent to 9 percent this year.

The Firth Rixson deal will help raise Alcoa’s aerospace profile, according to Sterne Agee analyst Josh Sullivan.

“We continue to believe Alcoa’s strong aerospace positioning is underappreciated,” Sullivan wrote.

Automakers, too, want to lighten up.

Around 30 percent of new vehicles are now rolling off the production line with aluminum hoods. Ford has unveiled an aluminum-body 2015 F-150 pickup that has all the power of the original, but weighs up to 700 pounds less. The truck goes on sale later this year.

The boards of directors for both companies have approved the Firth Rixson deal, which is expected to close by the end of this year.

Shares of Alcoa climbed 63 cents to $15.18 at the start of trading Thursday, topping $15 for the first time since the summer of 2011.

Last fall, the Dow Jones industrial average dropped Alcoa due partly to its sagging stock price.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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