Boeing has finalised a $4.7bn agreement to buy back Spirit AeroSystems in a deal which could also see Airbus take on the supplier’s activities relating to its own supply chain.
The coordinated deal arrives after months of speculation on the issue following the blow out of a Spirit-manufactured door plug on a 737 MAX 8 plane in January and subsequent investigations by the Federal Aviation Administration (FAA).
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Boeing CEO Dave Calhoun said: “This is an opportunity to bring back critical airplane manufacturing work on Boeing airplanes into our factories – where Boeing and Spirit world-class engineers and mechanics can work seamlessly together, focused on a common mission to build safe and quality airplanes for our customers.
“Among the many actions we’re taking as a company, this is one of the most significant in demonstrating our unwavering commitment to strengthen quality and make certain that Boeing is the company the world needs it to be.”
Boeing’s acquisition involves an all-stock transaction and will also see the company take on Spirit’s debts, bringing the total value of the agreement, expected to close in mid-2025, up to $8.3bn.
Meanwhile, Airbus said it had also entered into a binding sheet agreement on a potential acquisition of some of Spirit’s activities, which supply wing, fuselage and pylon parts for Airbus aircraft.
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By GlobalDataThe possible deal would see Spirit compensate Airbus to the sum of $559m due to the involvement of loss-making activities at some of the factories in the US, France, Northern Ireland, and Morocco.
While Airbus made sure to clarify there was “no guarantee that a transaction will be concluded”, the company’s hand would likely be forced if Boeing’s acquisition is approved.
Spirit CEO Patrick Shanahan said he believed that bringing the activities under the ownership of the manufacturers themselves would “enable greater integration and alignment.”
He said: “Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems.”
While the industry will be hoping that the breakup of Spirit, spun-out from Boeing in 2005, may help the US manufacturer address the quality control concerns about its production lines, the deal will also receive scrutiny on its effect on other Spirit customers.
Though the supplier seems set to sell its Airbus-related activities to the European manufacturer, Boeing confirmed its own acquisition would include other commercial, defence, and aftermarket operations, such as Spirit’s work with the US Department of Defence.
Boeing and Spirit’s quality control issues
At the centre of the acquisition is Boeing’s ongoing attempts to appease regulators and its airline customers after a series of audits and investigations found serious issues with its safety culture and multiple incidents of installation errors on its aircraft.
While the FAA and National Transportation Safety Board (NTSB) have mostly focussed on the manufacturer itself, with Boeing likely to blame for the missing bolts on the door plug involved in the Alaska incident, Spirit has also seen criticism from regulators for its quality control.
An audit conducted in response to the incident saw the FAA fail the supplier on seven of 13 tests and found that some of its technicians did not appear to have the necessary knowledge for the operations they were carrying out.
Notably, the FAA’s report recorded Spirit employees using a hotel key card to test a door seal and applying dish soap as a lubricant during the fitting of another
While Boeing recently presented its safety roadmap to the FAA, the company’s 737 MAX factories remain under increased oversight by the regulator, which has also limited their output.
By bringing Spirit’s activities back in-house, the manufacturing giant will be hoping to further appease the regulator and possibly influence the US Government’s decision on whether to bring charges in relation to the alleged violation of a deal made in 2021.
Speaking to Airport Technology’s sister publication Airforce Technology, Global Data Defence Analyst Tristan Sauer said: “The purchase of Spirit is likely designed to offset some of the issues they have had with manufacturing and quality control, likely looking to bring Spirit’s expertise and infrastructure in-house to help address their production backlog.”
