Aircraft fuselages destined for Boeing's 737 Max production facility are stored at its main supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, U.S., on Dec. 17, 2019.
Nick Oxford | Reuters
boeing is in talks to buy back AeroSystems Spiritwhich makes fuselages for Boeing's 737 Max planes, according to a person familiar with the matter, as both companies strive to eliminate manufacturing defects in the best-selling plane.
Spirit shares rose 13% early Friday afternoon, while Boeing shares fell about 1%. Spirit AeroSystems had a market capitalization of $3.3 billion as of Thursday's close.
“We do not comment on market speculation,” a Spirit AeroSystems spokesperson told CNBC. Boeing also declined to comment.
In 2005, Boeing spun off its operations in Kansas and Oklahoma and became today's Spirit AeroSystems. About 70% of Spirit's revenue last year came from Boeing, and about a quarter comes from making parts for Boeing's main rival, Airbus.
When Boeing CEO Dave Calhoun was asked about outsourcing the production of parts of his airplanes, he told CNBC in January: “Was it too far? Yeah… it probably did, but it's here and now.” and now I have to deal with it.”
Spirit has struggled financially and was last profitable in 2019, before the pandemic. In October, Spirit named Pat Shanahan, who spent roughly three decades at Boeing, as its new interim CEO.
The deal talks come less than two months after a section of a Boeing 737 Max 9 plane exploded during an Alaska Airlines flight. The Federal Aviation Administration temporarily grounded all planes in January, prompting investigations into the crash and Boeing production lines.
It was the latest and most serious in a series of failures on the Boeing 737 Max, the company's best-selling plane.
The door plug bolts on the Max involved in the January crash appeared to have been missing when it left Boeing's factory in Renton, Washington, according to a preliminary report from the National Transportation Safety Board.
Boeing has revealed several production problems and quality flaws in the fuselages Spirit makes, including improperly drilled holes and incorrect spacing in some fuselage components, problems that have slowed deliveries of new planes to airlines.
The FAA, which oversees Boeing and certifies its planes, has promised deeper scrutiny of the company's production lines since the Jan. 5 crash. Earlier this week, after a meeting with Calhoun, FAA Administrator Mike Whitaker said the agency was giving the company 90 days to come up with a plan to improve its quality control and safety systems.
Talks about the deal between Boeing and Spirit were first reported by The Wall Street Journal.
