Boeing Acquires Spirit AeroSystemsBoeing Acquires Spirit AeroSystems Boeing has announced an agreement to acquire Spirit AeroSystems, a major supplier of fuselages for Boeing’s 737 Max jets. The all-stock deal is valued at approximately $8.3 billion. Reasons for the Acquisition The acquisition is seen as an attempt by Boeing to regain control over a critical supplier that has faced quality control issues in recent years. Spirit produces about 70% of each 737 Max before it is sent to Boeing’s plant for final assembly. Recent Issues at Spirit Spirit has experienced a series of problems, including a labor dispute and production delays, which have impacted the delivery of 737 Max planes. A recent Alaska Airlines incident involving a mid-air blowout of a door panel on a 737 Max highlighted concerns about Spirit’s manufacturing practices. Improvements at Spirit Spirit has taken steps to address its quality control issues, including hiring a new CEO and implementing new procedures to prevent future incidents. Increased Oversight Following the recent incident, Boeing and the FAA have increased oversight of Spirit’s operations. The FAA has deployed additional inspectors and increased its presence at Spirit’s facilities. Benefits of the Acquisition Boeing believes the acquisition will benefit the flying public, airline customers, employees, shareholders, and the nation. It will allow Boeing to ensure the continuity of operations and support for Spirit’s customers.
Boeing has achieved billions in sales agreement to acquire Spirit AeroSystems, a major supplier of fuselages for the popular 737 Max jets, including the one involved in a mid-air blowout this year.
Boeing announced the $4.7 billion all-stock deal around midnight Monday. The total transaction value is approximately $8.3 billion, including Spirit’s last reported net debt.
“We believe this deal is in the best interests of the flying public, our airline customers, Spirit and Boeing employees, our shareholders and the nation more broadly,” Boeing President and CEO Dave Calhoun said in a news release.
The acquisition includes substantially all Boeing-related commercial activities, as well as additional commercial, defense and aftermarket activities. As part of the transaction, Boeing will work with Spirit to ensure continuity of operations supporting Spirit’s customers and the programs it acquires, including collaboration with the U.S. Department of Defense and Spirit defense customers related to defense and security missions.
The The acquisition is seen as an attempt by Boeing to regain control of a key supplier that has been plagued by quality control problems for years. The company was owned by Boeing until 2005, when it was sold as part of an effort to cut costs. Still, the two remained intertwined, with Spirit producing about 70 percent of each 737 Max before it was sent to Boeing’s plant in Renton, Washington, for final assembly.
Even before the Alaska Airlines blowout, a series of problems at Spirit — including a labor dispute last year that forced production workers to walk out for a week before a new contract was reached — had delayed deliveries of 737 Max planes. The problems prompted a shareholder lawsuit alleging that Spirit was slow to disclose the issues.
At a briefing last week, Elizabeth Lund, senior vice president overseeing Boeing’s quality control and assurance, said the fuselage of the 737 Max plane ultimately involved in the Jan. 5 door panel blowout was damaged when it arrived at the Renton plant. Work to address the problem involved removing a door panel, which was reinstalled but without the four bolts used to secure it. Lund said one of the steps Boeing has taken to prevent a recurrence of such an incident is to no longer accept fuselages that fail to meet quality standards.
Spirit has also been working to improve its operations. Last October, the company tapped former Boeing executive Pat Shanahan as its new CEO.
In the wake of the Jan. 5 eruption, both Boeing and the Federal Aviation Administration have increased oversight of Spirit. At a hearing before the Senate Commerce, Science and Transportation Committee, FAA Administrator Michael Whitaker said the company has not only deployed additional inspectors to Boeing facilities but also increased its presence with key suppliers, including Spirit.
