Sections of the Boeing Co. 737 fuselage sit on the Spirit AeroSystems assembly floor in Wichita, Kansas.
Daniel Acker | Bloomberg | Getty Images
boeing said Monday it will buy back its struggling airframe maker Spirit Aerosystems in a stock purchase deal that the aircraft maker says will improve safety and quality control.
Boeing said it agreed to pay $37.25 per Boeing share in exchange for Spirit, which would give the aerospace company an equity value of $4.7 billion. Including Spirit debt, the deal has a transaction value of $8.3 billion, Boeing said. Spirit shares closed Friday at $32.87 per share, giving it a market capitalization of about $3.8 billion.
Boeing revealed in March that it was in talks to acquire the Wichita, Kansas-based company, weeks after a fuselage panel exploded in mid-air from a nearly new Boeing 737 Max 9 in a Alaska Airlines flight, sparking a new crisis for Boeing. Spirit makes 737 fuselages and other parts, including sections of Boeing's 787 Dreamliners.
In 2005, Boeing spun off its operations in Kansas and Oklahoma and became today's Spirit AeroSystems. Boeing accounted for about 70% of Spirit's revenue last year, while about a quarter came from making parts for Boeing's main rival Airbus, according to a regulatory filing.
Boeing Chief Executive Dave Calhoun, who has said he will step down at the end of the year, said Monday that bringing Spirit into the company will “fully align” the companies' production systems and workforce.
“Among the many actions we are taking as a company, this is one of the most important to demonstrate our unwavering commitment to strengthening quality and ensuring Boeing is the company the world needs it to be,” Calhoun said in a message to employees. .
He said he expects the deal to close by mid-2025, subject to approval by regulators, Spirit shareholders and the sale of Spirit's Airbus aircraft operations.
Spirit CEO Pat Shanahan is considered a possible successor to Calhoun.
Airbus, meanwhile, announced Monday that it has reached an agreement with Spirit for the European aircraft manufacturer to receive compensation of $559 million from Spirit to acquire its manufacturing lines dedicated to Airbus aircraft. These include operations in Belfast, Northern Ireland, where the A220's wings and mid-fuselage are produced, A220 pylons in Wichita and A350 fuselage sections in North Carolina.
Mounting pressure
A preliminary National Transportation Safety Board report on the Jan. 5 Alaska Airlines incident said it appeared bolts holding the door plug in place were not attached to the Max 9 when it left the Boeing factory. and was delivered to Alaska Airlines months before.
That was the most serious of a series of production problems on Boeing planes, which also included Spirit-made fuselages that had poorly drilled holes and poorly connected fuselage panels. One way Boeing has tried to improve quality is to accept only defect-free airframes so that repairs or additional manufacturing steps don’t have to be done out of sequence, reducing the chances for errors.
The broader safety crisis stemming from the exploding door stopper on the Alaska flight has slowed deliveries of new Boeing planes to airlines and dealt financial blows to both Spirit and Boeing. Boeing’s chief financial officer said in May that the company would burn, rather than generate, cash this year — about $8 billion in the first half of 2024.
Boeing shares are down more than 30% this year.
The Federal Aviation Administration has said it will not allow Boeing to expand production until it is 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 lamented as a lack of improvement following two fatal Max crashes.
