Boeing Co.’s fuselage sections. 737s sit on the assembly floor at Spirit AeroSystems in Wichita, Kansas.
Daniel Acker | Bloomberg | Getty Images
Boeing said on Monday it would buy back the struggling airframe maker Spirit AeroSystems in an all-stock deal that the plane maker said would improve safety and quality control.
It said it agreed to pay $37.25 per Boeing share for Spirit, giving the aerospace company a stock value of $4.7 billion. Including Spirit’s debt, the deal has a transaction value of $8.3 billion, according to Boeing. Spirit shares closed Friday at $32.87 a share, giving it a market capitalization of about $3.8 billion.
Boeing in March revealed it was in talks to acquire the Wichita, Kansas-based company, weeks after a fuselage panel from a near-new Boeing 737 Max 9 was ejected from Alaska Airlines flight, triggering a new crisis for Boeing. Spirit makes the fuselages of the 737 and other components, including parts of Boeing’s 787 Dreamliners.
In 2005, Boeing spun off operations in Kansas and Oklahoma that became today’s Spirit AeroSystems. Boeing accounted for about 70% of Spirit’s revenue last year, with about a quarter coming from making parts for Boeing’s main rival, Airbus, according to a securities filing.
Boeing CEO Dave Calhoun, who has said he will step down at the end of the year, said Monday that bringing Spirit in-house would “fully align” the companies’ production systems and workforce.
“Among the many actions we take as a company, this is one of the most important to demonstrate our unwavering commitment to enhancing quality and making sure Boeing is the company the world needs,” Calhoun said in a message to employees.
It said it expects the deal to close in mid-2025, subject to approval by regulators, Spirit shareholders and the sale of Spirit’s business dedicated to Airbus planes.
Spirit CEO Pat Shanahan is considered a possible successor to Calhoun.
Airbus, meanwhile, said on Monday it had reached an agreement with Spirit so that the European plane maker would be reimbursed $559 million by Spirit to acquire its manufacturing lines dedicated to Airbus planes. These include operations in Belfast, Northern Ireland, where the A220’s wings and center fuselage are produced, A220 pylons in Wichita and A350 fuselage sections in North Carolina.
Placement pressure
A preliminary report by the National Transportation Safety Board on the Alaska Airlines incident on Jan. 5 said it appeared that the screws holding the door stopper in place were not attached to the Max 9 when it left the Boeing factory and was delivered to Alaska Airlines months ago.
This was the most serious of a number of production problems in Boeing planes, which also included fuselages manufactured by Spirit that had incorrect holes and incorrectly attached fuselage panels. One way Boeing has tried to improve quality is to accept only defect-free fuselages so that repairs or additional manufacturing steps do not have to be done out of order, reducing the chance of errors.
The broader safety crisis stemming from the explosion of the door plug on the Alaska flight has slowed deliveries of new Boeing planes to airlines and led to financial hits for both Spirit and Boeing. Boeing’s chief financial officer in May said the company would do so burn rather than generate cash this year — about $8 billion in the first half of 2024.
Boeing shares are down more than 30% this year.
The Federal Aviation Administration has said it will not let Boeing expand production until it is satisfied with its production lines.
Calhoun was grilled by lawmakers at a Senate hearing in June about the company’s safety record and what some senators complained was a lack of improvement after Max’s two fatal crashes.
