Boeing announced on Monday its decision to acquire Spirit AeroSystems, its troubled fuselage manufacturer, in an all-stock deal aimed at improving safety and quality control. The agreement involves Boeing offering $37.25 per share in Boeing stock for Spirit, which gives Spirit an equity value of $4.7 billion. Including Spirit’s debt, the total transaction value reaches $8.3 billion. Spirit’s shares had closed at $32.87 on Friday, with a market capitalization of approximately $3.8 billion.

The decision to purchase Spirit AeroSystems follows Boeing’s disclosure in March about ongoing acquisition talks, sparked by a significant safety incident involving a Boeing 737 Max 9 on an Alaska Airlines flight. Spirit AeroSystems, based in Wichita, Kansas, manufactures fuselages for the 737 and various components for Boeing’s 787 Dreamliners.

Spirit AeroSystems- Historical Context and Strategic Alignments

Spirit AeroSystems originated from Boeing’s operations in Kansas and Oklahoma, which were spun off in 2005. Last year, Boeing accounted for around 70% of Spirit’s revenue, while about 25% came from manufacturing parts for Boeing’s main competitor, Airbus. Boeing’s CEO, Dave Calhoun, who is set to retire at the end of the year, emphasized that reintegrating Spirit will synchronize the companies’ production systems and workforces.

Calhoun highlighted that this acquisition demonstrates Boeing’s commitment to enhancing quality and solidifying its position as a leading aerospace company. The deal is expected to be finalized by mid-2025, pending regulatory and shareholder approvals, as well as the divestiture of Spirit’s Airbus-dedicated operations. Pat Shanahan, Spirit’s CEO, is considered a potential successor to Calhoun.

Meanwhile, Airbus announced it had reached an agreement with Spirit for $559 million to acquire Spirit’s manufacturing lines dedicated to Airbus planes. This includes facilities in Belfast, Northern Ireland, Wichita, Kansas, and North Carolina, responsible for producing parts for the A220 and A350 aircraft.

Addressing Safety Concerns and Future Outlook

The acquisition comes in the wake of numerous production issues at Boeing. A preliminary report from the National Transportation Safety Board on a January 5 incident revealed that a door plug was improperly secured on a Boeing 737 Max 9 before it left the factory. This incident, the most serious among several production problems, has delayed Boeing’s aircraft deliveries and financially impacted both Boeing and Spirit.

Boeing has committed to accepting only defect-free fuselages to minimize errors and streamline production. The Federal Aviation Administration has also imposed restrictions on Boeing, requiring proof of satisfactory production lines before allowing expansion. In May, Boeing’s CFO acknowledged that the company would incur significant financial losses, approximately $8 billion, in the first half of 2024, largely due to these issues. Boeing’s stock has declined by more than 30% this year.

During a June Senate hearing, Calhoun faced severe criticism from lawmakers regarding Boeing’s safety record, especially after two fatal Max crashes. This acquisition of Spirit AeroSystems is seen as a crucial step in addressing these concerns and restoring confidence in Boeing’s manufacturing capabilities.

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