On Monday, the American aerospace giant Boeing announced that it had reached a definitive agreement to reacquire Spirit AeroSystems for $4.7 billion. This move comes after Boeing spun off Spirit in 2005 in a cost-cutting measure. Spirit AeroSystems is a major supplier for Boeing, specializing in producing fuselages, particularly for the famous 737 family of airplanes.
The acquisition will be an all-stock transaction, with Spirit shareholders receiving $37.25 per share in Boeing stock. However, Spirit’s net debt will raise the total deal value, bringing Boeing’s estimated cost closer to $8.3 billion.
This reacquisition is seen as a strategic move by Boeing to strengthen its control over its supply chain, particularly in the wake of recent challenges. The company has faced scrutiny over production quality issues in recent months, with an incident involving a detached door plug on a Boeing aircraft highlighting potential problems. Additionally, the Department of Justice is reportedly nearing criminal charges against Boeing related to two plane crashes in 2018 and 2019 that tragically claimed over 300 lives.
Regaining control of a critical supplier like Spirit AeroSystems allows Boeing to improve quality control and potentially streamline production processes. By bringing fuselage manufacturing back in-house, Boeing can ensure parts meet their exact specifications and implement stricter quality checks. Additionally, a closer relationship between Boeing and Spirit could lead to more efficient communication and collaboration in the design and development of future aircraft.
However, the Deal has its complexities. Spirit AeroSystems is also a significant supplier for Airbus, Boeing’s European competitor. Boeing and Spirit have negotiated a separate agreement with Airbus to address this potential conflict. This agreement involves Spirit divesting its manufacturing facilities that produce parts for Airbus aircraft. Airbus will reportedly compensate Spirit with $559 million for these facilities.
The future impact of this reacquisition on Boeing’s operations and its relationship with Airbus remains to be seen. Analysts believe the Deal could benefit Boeing in the long run by improving production efficiency and quality control. However, successfully integrating Spirit into Boeing’s fold and navigating the complexities of the Airbus relationship will be crucial for the Deal’s success.
The acquisition is subject to regulatory approval and is expected to close in the second half of 2024. If approved, this move will mark a significant shift in Boeing’s supply chain strategy and could have a lasting impact on the aerospace industry.