Talks underway for Boeing to buy Spirit AeroSystems amid quality concerns
Boeing is currently in negotiations to acquire Spirit AeroSystems, its key supplier for the 737 Max jetliners, which includes the aircraft that encountered a door-panel blowout incident in January.
A person familiar with the discussions shared this information with The Canadian Press, highlighting the uncertain outcome and timing of these talks. The confidentiality of the source adds a layer of uncertainty to the potential deal.
The Wall Street Journal initially reported these talks, noting that Spirit AeroSystems had engaged bankers to explore strategic options, including a potential sale back to Boeing, its former owner.
Following these reports, Spirit AeroSystems' shares surged by 15 percent in afternoon trading, indicating market optimism about the potential acquisition.
This development comes amid criticisms directed at Boeing for its manufacturing problems, which have been partly attributed to its outsourcing strategy to suppliers like Spirit. Boeing separated from Spirit in 2005, aiming to decentralize its supply chain for commercial airplanes.
Since then, Spirit has faced several quality issues, such as fuselage panels not aligning precisely and improper drilling of holes, contributing to delays in the delivery of Boeing 737s and 787s.
To address these challenges, Spirit replaced its CEO in October with Patrick Shanahan, a former Boeing executive and acting defense secretary under the Trump administration.
Increased scrutiny followed an incident on January 5, when an emergency door plug manufactured by Spirit blew off an Alaska Airlines 737 Max 9 mid-flight over Oregon.
The investigation revealed that bolts securing the panel were missing following a repair job at a Boeing factory, though it remains unclear who was responsible for the removal and failure to replace the bolts.
Boeing CEO David Calhoun and Patrick Shanahan have committed to collaborating to improve manufacturing quality. Shanahan has pledged to restore confidence among Boeing, regulators, and airlines.
Although Calhoun has defended Boeing's outsourcing practices in the past, he recently admitted on January 31, while announcing a fourth-quarter loss, that the company might have outsourced excessively.
Spirit AeroSystems, which generated 70 percent of its revenue last year from Boeing-related work, is also contemplating the sale of its operations in Ireland that manufacture parts for Airbus. The company reported a $616m loss last year, continuing a financial downturn since 2019, with losses totaling over $2.5bn.
In response, Boeing agreed in October to provide additional financial support to Spirit, including a $100m investment for factory retooling and a price adjustment that would grant the supplier an extra $455m over two years.
Boeing itself is facing manufacturing challenges, with the Federal Aviation Administration recently requiring the company to submit a plan within 90 days to enhance quality and address safety concerns.
This directive follows a year-long study by a panel of experts examining Boeing's practices.
