Summary

  • Boeing acquires Spirit AeroSystems for $4.7 billion, valuing it at $37.25 per share.
  • Spirit’s net debt of $8.3 billion will be assumed by Boeing, which currently has a net debt of $47.9 billion.
  • Airbus will divest Spirit’s Airbus-related sites for $560 million, ensuring no issues with existing Bombardier contracts.

On Tuesday, July 2, Bombardier revealed that it intends to have no issues with its existing contracts with Spirit AeroSystems to be recognized after the recent news of Boeing acquiring Spirit AeroSystems. Yesterday, on Monday, July 1, Boeing announced that it was purchasing Spirit AeroSystems for $4.7 billion in stock. Airbus also entered a $559 million agreement to maintain its vendor tree.

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Boeing Will Buy Spirit AeroSystems For $4.7 Billion In Stock & Airbus Enters $559 Million Agreement For Its Parts

Boeing is in the final stages of acquiring its once-owned sites in Wichita, Kansas, which have been operating as Spirit AeroSystems.

Purchase of Spirit AeroSystems by Boeing

The nearly $5 billion deal will be an all-stock transaction. This would value Spirit AeroSystems at $37.25 per share. Each Spirit AeroSystems shareholder will receive between 0.18 and 0.25 of Boeing shares for their single stock of Spirit. This is dependent on what Boeing’s shares are at the time of the award.

Boeing 737 aircraft fuselage shipment on BNSF train from Spirit Aerosystems

Photo: Ian Dewar Photography l Shutterstock

Additionally, Boeing intends to take on all of Spirit AeroSystems’ total debt. Currently, Spirit’s net debt is valued at approximately $8.3 billion. Boeing already has a net debt of $47.9 billion at the end of the first quarter of this year. However, this was down from the end of last year, when Boeing had a net debt of $52.3 billion.

The current Chief Executive Officer (CEO) of Boeing, David Calhoun, spoke about the acquisition. He stated,

“By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality.”

One issue with the purchase of Spirit was that the company also supplied many parts for Airbus, a major competitor of Boeing. However, Airbus came to an agreement with Spirit Aerosystems that would divest Spirit’s Airbus-related sites. Overall, Spirit will compensate Airbus nearly $560 million, as Airbus will now take over those sites.

Net Jets Bombardier Global 7500 aircraft is landing on runway 14 in DavosExisting Bombardier contracts with Spirit AeroSystems

The new-look Spirit will have an effect on many original equipment manufacturers (OEMs) in the future. However, Bombardier is not one of them. Bombardier said in a statement,

“Bombardier expects its supply contracts to be maintained to the highest standards of quality and performance. The company remains actively engaged with Spirit as part of the ordinary course of business under existing contracts.”

Bombardier has been utilizing Spirit as a supplier of major parts and aerostructures since the two companies announced an agreement in October 2019. The agreement included a definitive agreement to sell its aerostructures business in its entirety to Spirit. This includes the previously-owned Bombardier production facilities in Belfast, UK, and Casablanca, Morocco. It also includes the company’s aerostructures maintenance and repair facility in Dallas, Texas. The deal totaled $500 million and the assumption of $700 million in liabilities.

A Bombardier Challenger 605 flying in the sky.
Photo: InsectWorld | Shutterstock.com

A major factor of the deal was that Spirit would continue producing aerostructures as a vendor for Bombardier. All of Bombardier’s major general aviation aircraft, including the Challenger and Global families, utilize structures and parts that were manufactured by Spirit AeroSystems. Spirit can also provide supporting structures and parts for the Learjet family, which is no longer in production.

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