Boeing in Talks to Purchase Troubled Supplier Spirit AeroSystems: Reports

Airplane fuselages bound for Boeing’s 737 Max production facility await shipment on rail sidings at their top supplier, Spirit AeroSystems Holdings, in Wichita, Kansas, U.S.

Boeing, the renowned aircraft manufacturer, is currently in discussions to potentially acquire Spirit AeroSystems, an integral supplier. Spirit AeroSystems was previously part of Boeing until its sale in 2005 and has played a substantial role in Boeing operations. The talks between the two companies were first reported by the Wall Street Journal and the Seattle Times.

The reports of a possible deal have caused a surge in Spirit AeroSystems’ shares, with a 15% increase since the talks were disclosed. However, prior to this news, shares had been witnessing a decline, down 10% since the Alaska Airlines doorplug incident and a staggering 70% since the second fatal crash of a Boeing 737 Max in 2019, resulting in a prolonged grounding of the jet.

The reintegration of Boeing and Spirit AeroSystems’ manufacturing operations is believed to bring about aviation safety reinforcement, improved quality, and serve the interests of customers, employees, and shareholders. Boeing expressed its commitment to enhancing airplane safety and overall quality, stressing the significance of the millions of people who rely on the safety of their aircraft daily. However, there is no assurance of reaching an agreement, and it remains to be seen how the prospective integration would unfold.

Boeing, one of Spirit AeroSystems’ key customers, accounted for approximately $3.9 billion of its revenue, contributing to around 64% of its overall revenue in the previous year. While Airbus stands as the second largest customer, it is uncertain whether Boeing would retain this portion of Spirit AeroSystems’ business in the event of an acquisition. Spirit AeroSystems’ market capitalization, at the close of trading on the day the reports emerged, stood at $3.7 billion, comparable to the amount Boeing paid to Spirit AeroSystems the previous year as its major supplier.

Spirit AeroSystems and Boeing have faced quality control challenges in recent years, resulting in setbacks and the need for collaborative resolutions. Spirit AeroSystems’ quality issues have impacted Boeing’s operations, necessitating additional revenue compensations. Boeing’s commitment to actively work on safety and quality improvements remains steadfast, as it recognizes the importance of its responsibility to millions of passengers who trust its aircraft daily.

An incident aboard an Alaska Airlines flight revealed concerns related to the removal of bolts, specifically the ones responsible for keeping the door plug in place. Investigations indicated that the jet had experienced issues with rivets, which were earlier installed by Spirit AeroSystems. While ultimate responsibility is yet to be determined, Spirit AeroSystems’ quality concerns may have contributed to the incident alongside any responsibility Boeing may have had.

Spirit AeroSystems has faced various quality control issues in recent years, causing interruptions and incurring out-of-sequence work. Manufacturing deficiencies in 2023, primarily related to joining fuselage parts, resulted in the temporary suspension of 737 Max deliveries. Furthermore, Spirit AeroSystems’ flawed drilling of holes, recently brought to Boeing’s attention, necessitated rework on roughly 50 undelivered planes. These quality issues have had implications on Boeing’s production and delivery schedules.

Although speculation of a Boeing acquisition has spurred investor and industry attention, the details of the potential deal and its implications await further developments. As the talks progress, the aviation industry awaits clarification on the scope and impact of an integrated Boeing and Spirit AeroSystems operation.