Business

Boeing is in talks to buy supplier Spirit Aerosystems

Spirit said to be exploring separate sale of its Northern Ireland business

Spirit AeroSystems owns the former Bombardier plant in Belfast. Photograph: Clodagh Kilcoyne/ Reuters

Ryan Beene and Julie Johnsson
Fri Mar 1 2024 - 20:37

Boeing is in discussions to acquire Spirit AeroSystems, a move that would reclaim control of its struggling former aerostructures unit and the main supplier at the centre of numerous quality issues affecting the 737 Max jets.

The Wichita, Kansas-based supplier hired bankers to explore strategic options and has held preliminary talks with Boeing, according to people familiar with the matter, who asked not to be identified because the talks are confidential. Spirit is separately exploring the sale of a business in Northern Ireland that makes wings for Boeing’s chief rival, Airbus, the people said.

Representatives for Boeing and Airbus declined to comment. Spirit, which had a market value of about $3.3 billion as of Thursday’s close, declined to comment on market speculation.

Spirit shares jumped as much as 19 per cent on Friday in New York, after the Wall Street Journal reported earlier on the talks. Boeing fell as much as 2.3 per cent.

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Spirit Aero was spun out of Boeing in 2005 and sold to private equity investors, ending almost 80 years within the US planemaker’s fold. The move was part of Boeing’s drive to shed assets and ultimately more profitable.

But the disposal left the contractor without the protective cover of Boeing’s balance sheet – particularly when the company faced a major crisis like the pandemic. During its 2020 nadir, Spirit cut 6,800 employees and put salaried workers on a four-day work week to preserve cash.

Last year, Spirit restructured key contracts with Boeing, still its biggest customer, to help bolster its ailing finances. The supplier is now run by Pat Shanahan, a former Boeing executive, in a sign that the two companies are working more closely together.

Boeing and Spirit have faced withering scrutiny over quality control after a fuselage panel blew off a 737 Max during an Alaska Airlines flight in early January. Spirit assembles most of the 737 Max plane’s fuselage before shipping them by rail to Boeing’s factory in Renton, Washington, for final assembly of the aircraft.

US investigators have said the so-called door plug on the plane involved in the accident was apparently missing four key retention bolts meant to hold it in place when it was handed over to the customer.

The incident capped a series of quality lapses involving Boeing’s former aerostructures unit. A drilling mishap on an aft pressure bulkhead supplied by Spirit slowed deliveries of the 737 Max last year, the planemaker’s most important generator of cash flow. A separate issue with tail-fin fittings also affected output earlier in 2023. – Bloomberg

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