How Russia’s involvement in Ukraine affects Boeing’s bottom line

The sanctions against a 61-year-old Russian man in Vladimir Putin’s inner circle could have an impact on Boeing’s ability to keep up with its airplane manufacturing.

Sergey Chemezov is the CEO of Russia’s, and the world’s, largest titanium producer, Rostec. It provides more than a third of the titanium Boeing uses for its 787s.

Boeing and Chemezov’s state-owned company already run a joint-venture plant in the Ural Mountains, and plans for a second facility were announced in November. The company says that new facility will be directly engaged in building all of its commercial airplanes, including the 737MAX and 777X.

Boeing expects to spend about $27 billion in Russia over the next few decades.

The concern is that these sanctions against Chemezov could slow the flow of titanium and squeeze Boeing’s supply chain.

Boeing released this statement about the sanctions Wednesday: “Boeing has important partner and customer relationships with Russian commercial enterprises. We are aware of the new sanctions announced on Monday and are reviewing the matter to understand what impact, if any, there may be to our ongoing business and partnerships in the region.”

The sanctions do not extend to the company, only its CEO. The U.S. announced sanctions against Chemezov and six other Russian officials on Monday in retaliation for Russia’s actions in Ukraine. Seventeen companies associated with the men also received sanctions. The U.S. hopes to encourage Russia to back down in its support of pro-Russia militias in Ukraine, something Moscow said it is not doing.

Rostec produces everything from weapons to cars to smartphones. It said it doesn’t expect any disruptions.

Chemezov was targeted by the U.S. because of his close ties to Russian President Vladimir Putin. The two have known each other since the 1980’s, and Chemezov is in Putin’s inner circle.