Boeing announced Monday that it has finalized an agreement to acquire Spirit AeroSystems, its subcontractor, in a deal valued at approximately $4.7 billion.
This acquisition, involving an all-stock transaction at $37.25 per share, comes after Boeing disclosed in March its interest in reacquiring Spirit, which it originally spun off in 2005.
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders, and the country more broadly,” said Boeing president and CEO Dave Calhoun. He emphasized that reintegrating Spirit will allow Boeing to better align their production systems and workforce, focusing on safety and quality.
Spirit AeroSystems, which manufactures fuselages and other key parts for both Airbus and Boeing, has been under scrutiny for production quality issues. Airbus has agreed to acquire Spirit facilities that produce parts for its aircraft for a nominal fee of $1, with additional compensation of $559 million from Spirit AeroSystems. This includes sites related to the A350, A220, and their components in North Carolina, France, Belfast, Casablanca, and Kansas.
Airbus aims to stabilize its commercial aircraft production through this agreement, ensuring operational and financial sustainability.
Boeing’s decision to buy Spirit is also driven by recent safety concerns. Spirit is Boeing’s largest supplier, contributing around 70 percent of its revenue. The companies have faced intense scrutiny after a fuselage panel came off an Alaska Airlines 737 MAX mid-flight in January, linked to missing bolts on a door plug produced by Spirit.
The incident prompted the Federal Aviation Administration to increase oversight of Boeing and Spirit. Boeing introduced operational changes in March to improve coordination with Spirit AeroSystems.
This safety issue has reignited concerns following two fatal 737 MAX crashes in 2018 and 2019, leading to ongoing legal challenges for Boeing. The US Department of Justice (DOJ) may prosecute Boeing for violating a deferred prosecution agreement related to these crashes. A potential plea deal includes fines and the appointment of an external supervisor, as discussed in a recent DOJ presentation to the victims’ families.
Under a previous agreement from 2021, Boeing paid $2.5 billion to settle fraud charges and committed to enhancing its compliance program and internal controls. The DOJ’s recent findings suggest Boeing failed to meet these commitments, opening the company to further prosecution.
Despite contesting the DOJ’s conclusions, Boeing acknowledges the severity of the safety issues. Families of the crash victims are pushing for criminal prosecution of Boeing and its executives, along with a substantial fine of nearly $25 billion.
Boeing has slowed its 737 production to address these quality control issues, impacting its financial performance. Further legal challenges could deepen financial difficulties for Boeing, a critical supplier to the US military aerospace program.
