Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) announced this morning that it has reached a definitive agreement to acquire Precision Castparts Corp. (NYSE: PCP) for $235 per share in a transaction valued at about $37.2 billion, including $5.2 billion in Precision Castparts’ debt. The transaction requires that a majority of Precision Castparts outstanding shares are voted in favor of the merger, and it is expected to close in the first quarter of 2016, subject to customary closing conditions.

In a comment on the deal Buffett said, “For good reasons, [Precision Castparts] is the supplier of choice for the world’s aerospace industry, one of the largest sources of American exports.” At the cash price, Berkshire Hathaway is paying about 16 times 2017’s expected earnings per share of $14.22.

The acquisition gives Berkshire Hathaway exposure to the aerospace industry without having to increase its investment in airlines, which have never worked out especially well for Buffett. Because Precision Castparts is a supplier to both Boeing Co. (NYSE: BA) and Airbus, the acquisition gives Buffett another hook into the transportation sector without a direct investment in either an airline or an aircraft manufacturer.

Berkshire Hathaway paid around $27 billion in 2009 for the Burlington Northern Santa Fe (BNSF) railroad. Prior to Monday’s announcement, that had been Buffett’s largest acquisition. It was another transportation company that Buffett acquired in the depths of the recession with the belief that the U.S. economy would recover and that moving stuff around the country would be a good business.

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The BNSF acquisition looked particularly prescient when crude oil transportation out of U.S. shale plays came to depend on railroads because there were no pipelines. Is there a similar upside with Precision Castparts?

The company’s biggest customer is General Electric Co. (NYSE: GE), for which Precision Castparts supplies parts for GE’s engine division. Those engines are installed on planes made by Boeing and Airbus, among others, and whether or not the manufacturer or the buyer maintains the aircraft, Precision Castparts supplies the parts. The company also supplies airplane engine parts for the Pratt & Whitney division of United Technologies Corp. (NYSE: UTX) and U.K.-based Rolls-Royce.

The nearly decade-long backlogs at Boeing and Airbus promise substantial long-term revenue prospects, even if order growth is slowing. The aerospace division of Precision Castparts generates 70% of the company’s revenue, and in its 2015 fiscal year which ended in March, Precision Castparts posted total revenues of $10 billion. The revenue estimate for the current fiscal year is $10.17 billion while the 2017 estimate calls for revenues of $10.7 billion.

What Precision Castparts is faced with in the next few years is raising its rate of production without excessive capital spending. Both Airbus and Boeing are ramping production of their single-aisle commercial jets and will need their suppliers to ramp up as well. At the same time, the two big plane manufacturers are negotiating better pricing from suppliers and that could squeeze profits. Precision Castparts and other suppliers need to be wary of overpromising and underdelivering.

Precision Castparts stock traded up about 19% Monday morning, at around $230.85 in a 52-week range of $186.17 to $249.12.

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