New York: Boeing has reached an agreement to repurchase Spirit AeroSystems for $4.7 billion in stock, while Airbus plans to absorb the supplier’s struggling European operations in exchange for substantial compensation, following extensive negotiations.
The nearly two-decade autonomy of Spirit AeroSystems, the world’s largest standalone aerostructures company, concludes with this division between its major clients, prompted by challenges exacerbated by the Boeing 737 MAX crisis. This crisis was highlighted by a mid-air door plug incident in January, raising concerns about fuselage manufacturing resilience.
Boeing, which initially spun off Spirit in 2005, will buy back its former subsidiary for approximately $37.25 per share, according to Reuters. This acquisition values Spirit at $8.3 billion including debt.
“Bringing Spirit and Boeing together will enhance integration of manufacturing and engineering capabilities, including safety and quality systems,” stated Spirit CEO Pat Shanahan.
Spirit’s shares rose 8% in premarket trading, while Boeing saw a slight dip of under 1%.
The deal offers a 30% premium over Spirit’s stock price before talks were announced on March 1, marking a strategic move by Boeing amidst ongoing corporate and industrial challenges. These challenges stemmed from quality issues following the Alaska Airlines 737 MAX 9 door plug incident.
The agreement comes amid Boeing’s efforts to navigate through a turbulent period, with CEO Dave Calhoun set to depart. Speculation swirls around Shanahan as a potential successor.
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Airbus will assume control of core activities at Spirit’s plants in the US, Northern Ireland, France, and Morocco, and minor operations in Wichita. This move follows Airbus’s readiness to protect its interests should control of Airbus-related facilities change hands.
Airbus is set to receive $559 million from Spirit for the transaction, while compensating Spirit symbolically with $1 for the assets. This mirrors Airbus’s past acquisition of Bombardier’s CSeries program for $1, later rebranded as the A220.
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The deal also resolves uncertainties over the future of Northern Ireland’s key industrial employer, previously uncertain under Spirit’s ownership. Airbus may need substantial investment to enhance production and cost-efficiency of the A220 wings manufactured in Belfast.
Spirit plans to divest operations supporting Airbus programs in Prestwick, Scotland, and Subang, Malaysia, and non-Airbus related activities in Belfast.
