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 per cent, 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 per cent while broader indexes slipped.

Alcoa will pay $2.35 billion in cash and $500 million in stock to Firth Rixsons 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 per cent 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 havent recovered since the recession and Alcoa has been idling smelters to reduce capacity and cut costs.

This Alcoa press makes large forgings for major aircraft structures like wing box assemblies. 

This Alcoa press makes large forgings for major aircraft structures like wing box assemblies. Titanium is becoming widespread in high strength structures, while aluminum-lithium alloys are challenging composites for weight, strength and reparability in large airframe sections.

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 per cent to 9 per cent this year.

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

We continue to believe Alcoas strong aerospace positioning is underappreciated, Sullivan wrote.

Automakers, too, want to lighten up.

Around 30 per cent 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.