Boeing 737 fuselage sections sit on the assembly floor at Spirit AeroSystems in Wichita, Kansas.
Daniel Acker | Bloomberg | Getty Images
Boeing It said on Monday it would buy back the troubled aircraft structure maker. Spirit Aerosystems In an all-stock deal the aircraft maker said would lead to improved safety and quality control.
The company said it agreed to pay $37.25 per Boeing share for Spirit, giving the aircraft supplier an equity value of $4.7 billion. Boeing said the deal is worth $8.3 billion including Spirit’s debt. Spirit’s shares closed Friday at $32.87, giving it a market value of about $3.8 billion.
Boeing revealed in March that it was in talks to buy the Wichita, Kansas-based company, weeks after a fuselage panel on a nearly new Boeing 737 Max 9 exploded in mid-air. Alaska Airlines The flight, sparking a new crisis for Boeing. Spirit makes 737 fuselages and other parts, including sections of the Boeing 787 Dreamliner.
In 2005, Boeing spun off its Kansas and Oklahoma operations to become Spirit AeroSystems. Boeing accounted for about 70 percent of Spirit’s revenue last year, with about a quarter of that coming from making parts for Airbus, its main competitor, according to securities filings.
Boeing CEO Dave Calhoun, who has said he will step down at the end of the year, said Monday that bringing the Spirit into the company would be “fully compatible” with the companies' production systems and workforce.
“Of the many actions we are taking as a company, this is one of the most important in demonstrating our unwavering commitment to advancing quality and ensuring that Boeing is the company the world needs,” Calhoun said in a message to employees.
He said he expects the deal to close in mid-2025, subject to regulatory and shareholder approval and the sale of Spirit's Airbus operations.
Pat Shanahan, CEO of Spirit, is considered a possible successor to Calhoun.
Meanwhile, Airbus announced Monday that it had reached an agreement with Spirit under which the European planemaker will receive $559 million in compensation from Spirit to buy Airbus’s manufacturing lines. These include operations in Belfast, Northern Ireland, where the A220 wings and fuselages are produced, A220 pylons in Wichita and A350 fuselage sections in North Carolina. Airbus will pay $1 for the assets.
pressure build
The deal comes as Boeing is still grappling with the fallout from a plane fuselage explosion earlier this year.
U.S. authorities plan to indict Boeing and offer it a plea deal on conspiracy and fraud charges related to the development of its 737 Max jets, two of which crashed in 2018 and 2019, killing all 346 people on board, according to a lawyer for the victims' families.
The Justice Department said last May, months after the Alaska accident, that Boeing violated a 2021 settlement that protected it from prosecution because it apparently failed to install and maintain a certain compliance program.
A preliminary report from the National Transportation Safety Board into the Jan. 5 Alaska Airlines accident said it appeared that bolts holding the door seal in place were not installed on the Max 9 when it left the Boeing factory and was delivered to Alaska Airlines months ago.
This was the most serious of a series of production problems that Boeing aircraft faced, which also included Spirit-built airframes with improperly drilled holes and body panels that were not properly attached. One way Boeing tried to improve quality was to accept only defect-free airframes so that repairs or additional manufacturing steps would not have to be performed out of sequence, reducing the chance of errors.
The broader safety crisis sparked by a door seal explosion on an Alaska flight has slowed Boeing’s deliveries of new planes to airlines and dealt financial blows to both Spirit and Boeing. Boeing’s CFO said in May that the company would burn cash this year — about $8 billion in the first half of 2024.
The FAA said it would not allow Boeing to expand production until it was satisfied with its production lines.
Calhoun came under fire from lawmakers at a Senate hearing in June over the company's safety record and what some senators described as a lack of improvement in the wake of two deadly Max crashes.
Boeing shares are down more than 28% this year, while Spirit shares were up about 7% at Monday's close.
