Summary

  • Boeing is reportedly close to finalizing a deal to buy Spirit AeroSystems.
  • Airbus also plays a significant role in the acquisition talks, with plans to acquire some Spirit facilities.
  • Boeing is hopeful for a turnaround despite recent troubles, aiming to boost 737 MAX production later this year.

Ever since Boeing announced its intention to buy back Spirit AeroSystems earlier this year, there have been talks and discussions about how the deal would proceed, given that Spirit has diversified its business over the years.

Now, the latest reports suggest that Boeing is nearing a deal, with Spirit also making progress with its talks with Airbus for an appropriate company breakup in which all parties involved are satisfied.

Acquisition talks advance

Boeing is reportedly making progress in its attempt to buy back Spirit AeroSystems and is said to be pretty close to finalizing a deal. According to Reuters, sources have revealed that an agreement could be made within days or weeks, barring unforeseen circumstances.

Boeing 737 aircraft fuselage shipment on BNSF train from Spirit Aerosystems

Photo: Ian Dewar Photography l Shutterstock

However, it will not be as straightforward as simply buying a company, as much has changed over the years. Spirit AeroSystems has diversified its client list after separating from Boeing and now includes several other companies, including Boeing’s rival Airbus. Earlier this year, reports suggested that Airbus and Boeing were exploring options to split the supplier’s operations.

Airbus to have its own share

One of the major roadblocks in Boeing’s talks with Spirit was its association with Airbus. The European plane maker did not want Boeing anywhere close to its planes’ parts that Spirit has been tasked with making and threatened to block the deal.

However, things have advanced over the last few months, with Spirit holding separate talks with Airbus for a transatlantic breakup of the company. Spirit’s business with Airbus accounts for nearly one-fifth of its revenues, so it’s important for any deal to consider that.

Spirit AeroSystems facility in Wichita, Kansas

Photo: JHVEPhoto | Shutterstock

Airbus is said to be keen on acquiring Spirit’s Kinston composite parts factory in North Carolina, which deals with the central section of the A350 aircraft, and the A220 wings factory in Belfast, Northern Ireland. Industry sources also think that Airbus may have to spend more than $1 billion to make the operations in Belfast more affordable.

Furthermore, Spirit’s plants in Morocco, Scotland, and Malaysia are smaller in scale and will have to be dealt with separately. The next few weeks and months will bring some clarity to the company’s breakup.

Boeing hopeful of a turnaround

Boeing has been under close regulatory watch ever since the midair blowout incident in January involving Alaska Airlines’ 737 MAX 9 aircraft. The aircraft manufacturer’s reputation took a massive hit, with airlines, industry leaders, and regulators expressing concerns over its operations.

The Federal Aviation Administration (FAA) even capped Boeing’s monthly production of the 737 MAX planes at 38 aircraft, but Boeing is still producing less than that. However, Brian West, Boeing’s chief financial officer (CFO) and Executive Vice President of Finance, is hopeful that the company will ramp up to 38 airplanes per month during the year’s second half.

Boeing 737 MAX

Photo: Marco Menezes | Shutterstock

West said that Boeing’s employees have been working closely with the workers at Spirit AeroSystems in Wichita, Kansas, and that they’re hitting their early expectations. He said that, “… we’re not there yet, but we expect a good, positive trend in the trajectory so that we could have material progress as we get outside of June…”

Related

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