Boeing Enters Discussions to Acquire Spirit AeroSystems

Boeing Stock

Boeing Co. (NYSE:BA) is reportedly engaged in discussions to acquire Spirit AeroSystems Holdings Inc., a significant move that would bring back control of its previous aerostructures division, and a key supplier entangled in various quality concerns affecting the 737 Max airliner.

Sources familiar with the matter disclosed that the Wichita, Kansas-based supplier has engaged bankers to explore strategic options and has had preliminary discussions with Boeing. These discussions are kept confidential, as reported by insiders.

Additionally, Spirit is said to be exploring the potential sale of its business in Northern Ireland, responsible for manufacturing wings for Airbus SE. Airbus has also held initial discussions regarding the acquisition of this business segment.

Boeing, Airbus, and Spirit declined to comment on the matter. Following reports of the discussions, Spirit’s shares surged by as much as 19% in New York, while Boeing’s shares experienced a decline of up to 2.3%. Boeing’s shares have faced a 23% decrease in value this year, making it the poorest performer on the Dow Jones Industrial Average.

The potential acquisition of Spirit by Boeing, a company spun off in 2005, could represent a significant step in stabilizing Boeing’s supply chain amidst a series of production issues. The most recent incident occurred in January, involving a 737 Max 9 model losing a fuselage panel during flight. While Spirit manufactured the airframe, Boeing has asserted ultimate responsibility for safety and production protocols.

Should the acquisition proceed, it would be advantageous for Spirit, providing stability amid challenges, according to Vertical Research Partners analyst Rob Stallard. However, integrating Spirit into Boeing’s operations could pose additional challenges for Boeing, particularly regarding quality control and safety culture under regulatory scrutiny.

After its separation from Boeing, Spirit faced financial challenges, particularly during the pandemic. Pat Shanahan, a former Boeing executive, now leads Spirit, indicating closer collaboration between the two companies. Last year, Spirit restructured contracts with Boeing to alleviate financial strains.

Boeing’s interest in acquiring Spirit reflects a trend of bringing airplane structure suppliers in-house, similar to Airbus’s approach. Spirit’s primary customers are Boeing and Airbus, with Boeing accounting for 64% of its revenue last year.

Both Boeing and Spirit have faced criticism over quality control, especially following recent incidents. US investigators highlighted issues with Boeing’s former aerostructures unit, including a drilling mishap and problems with tail-fin fittings, impacting 737 Max production.

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