Boeing to acquire Spirit AeroSystems

Boeing Co. agreed on Sunday to buy Spirit AeroSystems Holdings Inc. for $37.25 per share in an all-stock transaction valued at $4.7 billion, according to individuals familiar with the matter.

The US planemaker also intends to assume approximately $3.5 billion of Spirit’s debt as part of the agreement, which may be disclosed as early as Monday.

Boeing started negotiations to bring Spirit back into the fold earlier this year.

This move stabilized the essential supply chain and addressed quality issues following the blowout of a doorplug on an Alaska Airlines 737 MAX 9 flight in January.

This event exposed serious quality and manufacturing deficiencies at both Boeing and Spirit, prompting a reevaluation of their partnership.

Spirit AeroSystems, once a division of Boeing, has faced increasing financial pressure and scrutiny, particularly after the incident. The company has struggled with workforce turnover post-COVID, leading to defects in producing critical components for Boeing’s jets. The Wichita campus, responsible for building most of the 737 airframes and the nose sections of the 787 Dreamliners, has been at the centre of these issues.

For Boeing, acquiring Spirit is crucial to stabilizing its supply chain and ensuring greater control over aircraft production. The planemaker has been losing substantial cash flow, with a $4 billion loss reported in the first quarter and a similar loss expected in the current quarter. Boeing’s credit rating is perilously close to speculative grade, making this acquisition strategically necessary to avoid further financial degradation.

In June, Unite, representing most of SpiritAerosystems’ UK workforce, expressed worries about Boeing’s takeover. In a statement, the union stated that it seeks assurance that the transaction will proceed, with Airbus acquiring “all those parts of the business which fall into its supply chain” and “keeping Belfast and Prestwick manufacturing operations intact with no loss of jobs.”

Unite general secretary Sharon Graham said, “Corporate giants must not risk workers’ livelihoods as they carve up this company’s future. Companies must quickly provide cast-iron guarantees to all workers regarding their futures.

“Unite will leave no stone unturned in fully protecting the future of Spirit’s highly skilled and dedicated workforce.”

Spirit Aerosystems Belfast employs around 3,600 people, and Unite believes that Spirit’s operations in Northern Ireland support 7,000 jobs. The majority of Spirit’s production in Northern Ireland is for Airbus; however, about 40% of jobs are related to production for other aerospace businesses such as Bombardier and Rolls-Royce. Prestwick employs 1,000 people, and Unite is requesting similar job security promises.

Despite these challenges, Boeing and Airbus have reached an understanding regarding the division of Spirit’s programs. The outcome of these negotiations is critical, as it will determine how the two companies move forward in their respective pursuits.

As Boeing navigates this transition, the aerospace industry will closely watch how this reintegration impacts its production capabilities and competitive standing in the market.