Boeing agrees to buy fuselage maker Spirit AeroSystems in $4.7 billion deal
Boeing Co. 737 fuselage sections sit on the assembly floor at Spirit AeroSystems in Wichita, Kansas.
Daniel Acker | Bloomberg | Getty Images
Boeing said Monday that it will buy back Spirit AeroSystems in an all-stock deal that the planemaker has said will improve safety and quality as it struggles with its latest manufacturing crises.
Boeing in March disclosed that it was in talks to acquire the Wichita, Kansas-based company, weeks after a fuselage panel blew out midair from a nearly new Boeing 737 Max 9 on an Alaska Airlines flight. Spirit makes the fuselages for the 737 and other parts, including sections of Boeing’s 787 Dreamliners.
A preliminary report from the National Transportation Safety Board into the Jan. 5 accident said it appeared the bolts that hold the door plug in place weren’t attached to the Max 9 when it left Boeing’s factory and was handed over to Alaska Airlines months before the accident.
That was the most serious of a host of production problems on Boeing planes, which also included Spirit-made fuselages that had misdrilled holes and misconnected fuselage panels.
The crisis stemming from the door-plug blowout on the Alaska accident has slowed Boeing’s deliveries of new planes and has been a financial hit for both Spirit and Boeing. Its CFO in May said the company would burn, rather than generate cash this yearâabout $8 billion in the first half of 2024. Boeing’s shares are down more than 30% this year.
One way Boeing has tried to improve quality is to accept only fuselages without defects so that repairs or additional manufacturing steps won’t have to be made out of sequence, reducing the changes of errors.
Boeing is under pressure from investors, airlines, lawmakers, regulators and the public to show it can improve quality. Bringing Spirit back in house could give Boeing a more watchful eye on quality as U.S. lawmakers and regulators ramp up scrutiny of the jetmaker. Boeing spun off operations in Kansas and Oklahoma that became the present-day Spirit AeroSystems in 2005.
Boeing accounted for about 70% of Spirit’s revenue last year, while roughly a quarter came from making parts for Boeing’s main rival, Airbus, according to a securities filing.
The Federal Aviation Administration has said it won’t let Boeing expand production until it is satisfied with its production lines.
CEO Dave Calhoun, who in March said he would step down by year’s end, was skewered by lawmakers in a June Senate hearing over the company’s safety record and what some Senators lamented was a lack of improvement in the wake of two deadly Max crashes.
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