Boeing Considers Acquiring Spirit AeroSystems, Fuselage Maker, Amid Quality Defects Surge

17

Boeing and Spirit AeroSystems announced Friday that they are discussing the possibility of repurchasing Spirit AeroSystems, the fuselage maker of Boeing’s 737 Max planes. The action taken by the two companies combats the production problems of popular airlines.

Spirit Airlines shares rose 15% on Friday, while Boeing Co. Its shares fell almost 2%. Spirit AeroSystems’ market capitalization was $3.8 billion as of Friday’s close.

Read More: Apple Reverses Decision, Maintains Current iPhone EU Web Apps Setup in iOS 17.4

In 2005, Boeing gave up its operations in Kansas and Oklahoma to form Spirit AeroSystems. Last year, Spirit earned about 70% of its revenue from Boeing; about a third of that came from products made by its main rival, Airbus. Airbus declined to comment on ongoing negotiations.

Boeing said on Friday it believes the realignment of its manufacturing operations with Spirit AeroSystems will improve aviation safety, improve good standards and work for stakeholders. However, Boeing said the deal was not final but promised to improve the safety and quality of the aircraft.

Spirit AeroSystems is also confirmed to be in talks.

Boeing CEO Dave Calhoun admitted in an interview with CNBC in January that there may be too much aircraft production, saying: “Is it too much?” Yeah… that would be the case, but I have to deal with it here and now.

Financially Spirit is facing difficulties; The last year’s profit was in 2019, before the pandemic began. In October, Spirit named Pat Shanahan, a former Boeing executive with nearly 30 years of experience, as interim chief.

These discussions follow an incident less than two months ago in which a Boeing 737 Max 9 malfunctioned during an Alaska Airlines flight. This led the US Federal Aviation Administration (FAA) to temporarily ground all 737 Max aircraft in January and launch an investigation into the incident and Boeing’s production process.

The incident compounded problems with the Boeing 737 Max, the company’s flagship aircraft. A preliminary report from the National Transportation Safety Board shows that bolts on the doors of the Max passenger plane involved in the January crash at Boeing Co.’s Renton, Washington, plant were found to have been improperly installed.

Boeing has reported several production incidents of Spirit-built airframes encountering problems and quality issues in some areas, including improper drilling and misalignment. The problems caused delays in the delivery of new aircraft to airlines.

The FAA, which inspects Boeing and certifies its planes, has promised to increase inspections of the company’s production processes since the incident on January 5. After meeting with Calhoun earlier this week, FAA Administrator Mike Whitaker announced that the agency would give Boeing 90 days to develop a plan to strengthen its regulatory and safety systems.

Ongoing talks between Boeing and Spirit AeroSystems were reported by The Wall Street Journal.