Boeing said Monday that it will buy back its struggling fuselage maker Spirit AeroSystems in an all-stock deal that the planemaker has said will improve safety and quality control.
It said it agreed to pay $37.25 a share in Boeing stock 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 shares closed Friday at $32.87 a share, giving it a market capitalization of about $3.8 billion.
Boeing in March disclosed that it was in talks to acquire the Wichita, Kansas-based company, weeks after a fuselage panel blew out midair from a nearly new Boeing 737 Max 9 on an Alaska Airlines flight, sparking a fresh crisis for Boeing. Spirit makes the fuselages for the 737 and other parts, including sections of Boeing’s 787 Dreamliners.
In 2005, Boeing spun off operations in Kansas and Oklahoma that became the present-day Spirit AeroSystems. 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, on Monday said bringing Spirit in-house will “fully align” the companies’ production systems and workforces.
“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,” Dave Calhoun said in a message to employees.
He said he expects the deal to close mid-2025, subject to approval by regulators, Spirit shareholders and the sale of Spirit’s operators dedicated to Airbus planes.
Spirit’s CEO Pat Shanahan is considered a possible replacement for Calhoun.
Airbus, meanwhile, said Monday it has reached an agreement with Spirit so that the European aircraft manufacturer is compensated $559 million by Spirit to acquire its manufacturing lines dedicated to Airbus planes. Those include operations in Belfast, Northern Ireland, where the wings and mid-fuselage of the A220 is produced, A220 pylons in Wichita, Kansas, and A350 fuselage sections in North Carolina.
Mounting pressure
A preliminary report from the National Transportation Safety Board into the Jan. 5 accident said it appeared the bolts that hold the door plug in place weren’t attached to the Max 9 when it left Boeing’s factory and was handed over to Alaska Airlines months before the accident.
That was the most serious of a host of production problems on Boeing planes, which also included Spirit-made fuselages that had misdrilled holes and misconnected fuselage panels.
The crisis stemming from the door-plug blowout on the Alaska flight has slowed Boeing’s deliveries of new planes to airlines, and has driven financial hits for both Spirit and Boeing. Boeing’s CFO in May said the company would burn, rather than generate cash this year—about $8 billion in the first half of 2024. Boeing’s shares are down more than 30% this year.
One way Boeing has tried to improve quality is to accept only fuselages without defects so that repairs or additional manufacturing steps won’t have to be made out of sequence, reducing the changes of errors.
The Federal Aviation Administration has said it won’t let Boeing expand production until it is satisfied with its production lines.
Calhoun was skewered by lawmakers in a June Senate hearing over the company’s safety record and what some Senators lamented was a lack of improvement in the wake of two deadly Max crashes.