Summary
- Patrick Shanahan, the current chief executive of Spirit AeroSystems, could become the chief executive of Boeing, something that he has not denied while speaking with The Seattle Times.
- Boeing announced significant changes to its executive leadership in March, which included David Calhoun, the President and CEO of Boeing, stepping down from his role at the end of 2024.
- Most recently, Boeing announced that it has entered into a definitive agreement to acquire Spirit AeroSystems for $4.7 billion.
Patrick Shanahan, the current president and chief executive officer (CEO) of Spirit AeroSystems, which just entered into an agreement with Boeing for the latter to purchase the former, could be lined up to take over the top role of Boeing, which will be vacant at the beginning of 2025.
Replacing Calhoun
Speaking in an exclusive interview with The Seattle Times, Shanahan did not deny that he could become the CEO of Boeing, only remarking that it was not his place to comment on any future plans of the aircraft manufacturer. Instead, he reiterated that he was focused on getting the deal between Boeing and Spirit AeroSystems done.
David Calhoun, the current president and CEO of Boeing, announced that he would step down from his role at the end of 2024 on March 25. In addition, Larry Kellner, who was the chair of the board of Boeing, said that he would not run for re-election for his role. Steve Mollenkopf succeeded Kellner, with the former also leading the process of Boeing choosing its next chief executive.
Photo: VDB Photos | Shutterstock
The same announcement included news that Stan Deal, the then-current President and CEO of Boeing Commercial Airplanes (BCA), would retire with immediate effect. Stephanie Pope, who served as the chief operating officer (COO) of Boeing between January and March, took over Deal’s role leading BCA.
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Troubling 2023
Shanahan took over the reins at Spirit AeroSystems on September 30, 2023, when the executive replaced Tom Gentile as the President and CEO of the Tier 1 supplier for Airbus and Boeing. The changes came as the supplier struggled to contain quality issues that were present at its facilities months before the Alaska Airlines Boeing 737 MAX 9 lost its door plug in January.
In March 2023, Spirit AeroSystems had to publicly rebuke that there was no analysis error at its sites that had led to Boeing suspending the deliveries of Boeing 787 aircraft. However, in April 2023, Spirit AeroSystems stated that it notified Boeing that there was a quality issue on the aft fuselage section of certain models’ fuselages of the 737 built by the supplier.
“We have processes in place to address these of types of production issues upon identification, which we are following. Spirit is working to develop an inspection and repair for the affected fuselages.”
Photo: JHVEPhoto | Shutterstock
In June 2023, it temporarily suspended factory operations at its Wichita, Kansas, site due to a labor dispute, but quality problems continued to bog down the company. In August 2023, Spirit AeroSystems announced another problem with the 737 fuselages that it builds, this time involving elongated fastener holes on the aft pressure bulkhead.
Throughout the year, Spirit AeroSystems had bled cash. While it ended 2022 with $659 million in cash, by the end of Q3 2023, it was left with $374 million in cash, with net debt rising slightly to $3.875 billion. In comparison, at the end of 2022, its net debt was $3.869 billion.
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Acquired by Boeing
As a result, Shanahan, who served on the board of Spirit AeroSystems, was brought in to steer the company in the right direction. After all, the executive had spent 31 years at Boeing, including holding senior management positions at the manufacturer’s commercial aircraft business. In addition, Donald Trump, the former president of the US, appointed Shanahan as the acting US Secretary of Defense in 2019.
Nevertheless, Boeing was also keen to help its key supplier. In October, the two companies signed an agreement that resulted in price adjustments for Boeing 737 and shipsets, as well as Boeing injecting $100 million into Spirit AeroSystems “for tooling and capital through 2025 for certain planned and potential 737 and 787 rate increases.”
Photo: Ian Dewar Photography | Shutterstock
Eventually, the Alaska Airlines flight AS1282 door plug blowout, and the subsequent scrutiny of the two companies’ quality and safety processes first resulted in closer cooperation between the pair and concluded in a definitive agreement for Boeing to purchase Spirit AeroSystems. The deal, valued at $4.7 billion – plus Boeing assuming Spirit AeroSystems’ $3.6 billion net debt – would bring the supplier within the aircraft manufacturer’s organization and according to Calhoun, would enable both companies to align their safety and quality management systems fully.
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