Boeing has announced its plan to reacquire Spirit AeroSystems, a troubled supplier, in an $8.3 billion deal that will bring the manufacturing of critical components back in-house. This move marks the end of Boeing’s experiment with outsourcing component manufacturing, a strategy that began in 2005 when Spirit AeroSystems was spun off from Boeing’s Wichita, Kansas, plant.
The reacquisition will see Spirit AeroSystems return to Boeing’s control, encompassing “substantially all Boeing-related commercial operations” as well as select commercial, defence, and aftermarket operations. This strategic decision aims to streamline Boeing’s production processes and address recent safety concerns.
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders, and the country more broadly,” stated Boeing president and CEO Dave Calhoun. “By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives, and outcomes – centred on safety and quality.”
Spirit AeroSystems has been a crucial supplier for Boeing, manufacturing fuselages and other components for the 737 aircraft, including the 737 MAX family. This aircraft line has faced heightened scrutiny following a mid-air blowout of a door plug on a 737 MAX 9 in January. The buyout aims to address these safety issues by bringing the manufacturing processes under Boeing’s direct supervision.
In Australia, Virgin Australia remains the sole airline operating the 737 MAX family, having recently received its seventh MAX 8 aircraft. However, the airline’s order of 31 new 737 MAX aircraft, including 25 MAX 10s, has been delayed due to ongoing production issues at Boeing. The Federal Aviation Administration (FAA) has barred Boeing from ramping up MAX production until these issues are resolved.
Patrick M. Shanahan, president and CEO of Spirit AeroSystems, endorsed the buyout as the right move for the manufacturer. “After carefully evaluating Boeing’s offer to combine, we are confident this transaction is in the best interest of Spirit and its shareholders, and will benefit Spirit’s other stakeholders,” Shanahan said. “Bringing Spirit and Boeing together will enable greater integration of both companies’ manufacturing and engineering capabilities, including safety and quality systems.”
Additionally, Spirit AeroSystems manufactures components for some Airbus planes. The company is currently negotiating with Airbus for the European planemaker to acquire the relevant assets, further streamlining operations. “We are proud of the part we have played in Airbus’ programs and believe bringing these programs under Airbus ownership will enable greater integration and alignment,” Shanahan added.
This reacquisition comes at a critical time for Boeing, which recorded a $355 million net loss in the March quarter, primarily due to challenges in the Commercial Airplanes division. By bringing Spirit AeroSystems back under its umbrella, Boeing aims to regain control over its supply chain and address ongoing production and safety concerns, ultimately benefiting its stakeholders and the broader aviation industry.
