Boeing acquires Spirit AeroSystems for $4B to address safety concerns
Boeing has confirmed its plans to acquire Spirit AeroSystems in an all-stock deal valued at over $4 billion, according to Reuters The agreement, which concludes months of negotiations, is part of Boeing's strategy to tackle its ongoing safety crisis. The boards of both companies met on Sunday and agreed on the terms, with an official announcement expected later today.
Deal details and implications for Spirit AeroSystems
The acquisition values Spirit AeroSystems at approximately $4.7 billion, as per Reuters. However, the deal is contingent on regulatory approvals and would result in the breakup of Spirit. Some of the Kansas-based supplier's assets will be transferred to French planemaker Airbus. The specifics of a parallel deal for Spirit to sell its Europe-focused operations to Airbus remain unclear.
Acquisition follows safety crisis and production slowdown
The acquisition follows a safety crisis triggered by a mid-air blowout of a door plug on a new 737 MAX 9 jet on January 5. This incident revealed numerous safety and quality issues at Boeing, leading to a significant slowdown in production that impacted the global commercial aviation industry. Spirit AeroSystems, the manufacturer of the door plug, was originally spun off from Boeing in 2005.
Boeing's challenges and efforts to reform safety issues
Boeing's decision to reacquire Spirit is part of an effort to address its safety issues and bolster its production line. Despite this, the acquisition will not immediately resolve Boeing's problems. The company has been losing market share to Airbus for years and continues dealing with the aftermath of twin crashes that resulted in nearly 350 fatalities and led to the grounding of the 737 MAX.
Boeing's leadership and regulatory scrutiny
The twin accidents led to the appointment of current CEO Dave Calhoun, who was roped in to resolve problems at the manufacturer. However, Calhoun will leave later this year with the company facing increased regulatory scrutiny and a damaged reputation. Recently, Boeing submitted a comprehensive plan to the FAA addressing "systemic quality-control issues" at the company.
