Boeing announced on Sunday (June 30) that it plans to acquire its key component supplier, Spirit AeroSystems, for $4.7 billion, aiming to improve the quality and safety of Boeing aircraft under increasing scrutiny from the U.S. Congress, airlines, and the Department of Justice.
According to the Associated Press, Spirit Aero previously belonged to Boeing, and this acquisition will reverse Boeing’s long-standing strategy of outsourcing key aircraft production work. Issues with Spirit Aero led to disruptions in the production and delivery of popular jetliners such as the Boeing 737 and 787, drawing criticism towards Boeing’s practices.
Boeing CEO Dave Calhoun stated in a statement released on Sunday evening, “We believe that this transaction is in the best interest of the flying public, our airline customers, Spirit Aero, Boeing employees, our shareholders, and the entire nation.”
On January 5, a Boeing 737 Max 9 aircraft operated by Alaska Airlines had its cockpit door explode and detach while flying over Oregon, heightening concerns about the safety of Boeing aircraft. Shortly after, the Federal Aviation Administration (FAA) announced increased oversight over Boeing and Spirit Aero, the company providing the fuselage for the involved aircraft.
Although no one was seriously injured in this incident, it raised a series of other issues. In May of this year, the U.S. Department of Justice stated that Boeing had violated a deferred prosecution agreement reached in 2021, which was aimed at protecting Boeing from criminal charges of conspiracy to defraud. These charges stemmed from two fatal crashes in Indonesia and Ethiopia in 2018 and 2019, involving the Boeing 737 Max jet that claimed the lives of 346 people. Investigators attributed these crashes to a sensor malfunction in the flight control system.
Boeing separated from Spirit Aero, headquartered in Kansas, in 2005. However, in recent years, Boeing has faced increasing quality issues with its aircraft, including inaccurate assembly of fuselage panels and improper drilling.
Prior to the Alaska Airlines incident, things seemed to be relatively smooth for Boeing. However, the investigation into the incident revealed that the bolt used to secure the patched cockpit door went missing after maintenance. It remains unclear who removed the bolt during the aircraft repair and failed to replace it.
Spirit Aero announced in May that due to production slowdowns since the January incident, the company would lay off approximately 450 employees. The company had a total workforce of just over 13,000 employees.
Spirit Aero CEO Patrick Shanahan stated, “The merger of Spirit Aero and Boeing will better integrate the manufacturing and engineering capabilities of the two companies, including safety and quality systems.”
Spirit Aero stated that the equity value of the acquisition is $4.7 billion, at $37.25 per share, with a total transaction value of about $8.3 billion, including the company’s recently reported net debt.
Both companies also announced agreements with Airbus to negotiate the acquisition of Spirit Aero assets involved in projects operated by the European company. The agreements with Airbus will come into effect after Boeing completes the acquisition of Spirit Aero.
On Monday, both Boeing and Spirit Aero saw their stock prices increase by over 3%.