Boeing Co. Aircraft Sections. 737s sit on the assembly floor at Spirit AeroSystems in Wichita, Kansas.
Daniel Acker | Bloomberg | Getty Images
Boeing said Monday it will buy back its struggling plane maker Spirit AeroSystems in an all-stock deal that the plane maker has said will improve safety and quality control.
It said it agreed to pay $37.25 per Boeing share for Spirit, giving the aerospace company an equity value of $4.7 billion. Including Spirit’s debt, the deal has a transaction value of $8.3 billion, Boeing said. Spirit’s stock 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 buy the Wichita, Kansas-based company, weeks after a fuselage panel exploded mid-air from a near-new Boeing 737 Max 9 in a Alaska Airlines flight, causing a new crisis for Boeing. Spirit makes fuselages for the 737 and other parts, including parts for Boeing 787 Dreamliners.
In 2005, Boeing spun off operations in Kansas and Oklahoma that became Spirit AeroSystems today. 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.
CEO Dave Calhoun, who has said he will step down at the end of the year, said Monday that bringing Spirit in-house will “completely connect” the companies’ manufacturing systems and workforce.
“Among the many actions we are taking as a company, this is one of the most important in demonstrating our unwavering commitment to strengthening quality and making sure Boeing is the company the world needs it to be,” said Dave Calhoun. 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 dedicated Airbus aircraft operators.
Spirit CEO Pat Shanahan is considered a possible replacement for Calhoun.
Meanwhile, Airbus said on Monday it has reached an agreement with Spirit for the European plane maker to be compensated $559 million by Spirit to buy its dedicated production lines for Airbus jets. They include operations in Belfast, Northern Ireland, where the A220 wings and midbody are manufactured, A220 pylons in Wichita, Kansas, and A350 fuselage sections in North Carolina.
Mounting pressure
A preliminary report from the National Transportation Safety Board on the Jan. 5 accident said it appeared that the bolts holding the door latch in place were not attached to the Max 9 when it left the Boeing factory and was delivered to Alaska Airlines months before the accident.
This was the most serious of a series of manufacturing problems on Boeing planes, which also included planes produced by Spirit that had holes drilled incorrectly and fuselage panels incorrectly attached.
The crisis stemming from the explosion of a door plug on the Alaska flight has slowed Boeing’s deliveries of new planes to airlines and dealt a financial blow to both Spirit and Boeing. Boeing’s CFO said in May that the company would 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.
One way Boeing has tried to improve quality is to accept only defect-free airframes so that repairs or additional manufacturing steps don’t have to be done out of sequence, reducing error variances.
The Federal Aviation Administration has said it will not allow Boeing to expand production until it is satisfied with its production lines.
Calhoun was grilled by lawmakers at a Senate hearing in June on the company’s safety record, and what some senators complained was a lack of improvement after Max’s two fatal crashes.