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Business News/ News / Boeing is reportedly in talks to buy Spirit AeroSystems, its key supplier on the troubled 737 Max
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Boeing is reportedly in talks to buy Spirit AeroSystems, its key supplier on the troubled 737 Max

Boeing is reportedly in talks to buy Spirit AeroSystems, its key supplier on the troubled 737 Max

Boeing is reportedly in talks to buy Spirit AeroSystems, its key supplier on the troubled 737 MaxPremium
Boeing is reportedly in talks to buy Spirit AeroSystems, its key supplier on the troubled 737 Max

DALLAS (AP) — Boeing is in talks to buy Spirit AeroSystems, which builds fuselages for Boeing 737 Max jetliners, including the one that suffered a door-panel blowout in January, according to a person knowledgeable about the discussions.

The timing of a deal — or whether the two sides even reach a final agreement — is uncertain, according to the person, who spoke about the private talks on condition of anonymity.

The Wall Street Journal first reported the talks. The newspaper said Friday that Spirit hired bankers to consider strategic options and has held preliminary discussions about a sale back to Boeing, its former owner.

Boeing and Spirit AeroSystems declined to comment.

Shares of Spirit jumped 15% in afternoon trading.

A deal could help Boeing respond to critics who have blamed the company's manufacturing problems in large part on outsourcing key work to Spirit and other suppliers.

Boeing spun off Spirit in 2005 as part of a strategy to outsource the supply chain for its commercial planes. In recent years, quality problems have mounted at Spirit, including fuselage panels that didn't fit together precisely enough and holes that were improperly drilled. Those and other flaws held up deliveries of Boeing 737s and 787s.

Spirit removed its CEO in October and replaced him with Patrick Shanahan, a former Boeing executive who served as acting defense secretary in the Trump administration.

Scrutiny of Spirit — which is not related to Spirit Airlines — grew even stronger after an emergency door plug that it made blew off an Alaska Airlines 737 Max 9 over Oregon on Jan. 5.

Investigators said the panel had been removed at a Boeing factory to let Spirit workers fix damaged rivets, and bolts that help hold the panel in place were missing after the repair job. It is not clear who removed the bolts and failed to put them back.

Two weeks later, Boeing CEO David Calhoun toured the Spirit factory in Wichita, Kansas. Calhoun and Shanahan pledged to work together to improve manufacturing quality. Shanahan said Spirit would work with Boeing, regulators and airlines, and he vowed, “We will restore confidence."

Calhoun has long defended Boeing's outsourcing, but his tone changed in recent weeks. On Jan. 31, as Boeing reported a fourth-quarter loss, Calhoun said that outsourcing probably went too far.

About 70% of Spirit AeroSystems' revenue last year came from work done for Boeing, according to Spirit's latest annual report. That is up from 60% two years earlier. Most of the company's other revenue comes from making parts for Airbus, Boeing’s European rival.

Spirit also is looking into selling operations in Ireland that make parts for Airbus, the Journal reported.

Spirit lost $616 million last year and hasn't turned a full-year profit since 2019. Since then, it has lost more than $2.5 billion. Boeing agreed in October to give more financial help to Spirit. Boeing said it would provide $100 million for Spirit to retool its factory and adjust prices to give the supplier another $455 million over two years.

Boeing has its own manufacturing problems. This week, the Federal Aviation Administration gave the company 90 days to submit a plan to improve quality and to address safety concerns raised by a panel of experts who spent a year studying Boeing.

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Published: 02 Mar 2024, 12:22 AM IST
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