Boeing in talks to acquire Spirit AeroSystems, a struggling supplier

Boeing said Friday it was in talks to acquire Spirit AeroSystems, a struggling supplier the manufacturer founded nearly two decades ago that makes the 737 Max bodies.

By reabsorbing Spirit, Boeing would attempt to rescue and restructure a troubled but important partner, which has been plagued by years of losses and quality control problems. Spirit’s problems have also at times limited how quickly Boeing can produce Max planes, the most popular commercial aircraft.

Bringing Spirit, one of the company’s key suppliers, back in-house would be a major strategic change for Boeing, which has long relied on outsourcing to make its planes. That strategy has come under increasing scrutiny amid concerns about Boeing’s quality problems.

Both companies have faced intense scrutiny since Jan. 5, when a panel on a 737 Max 9 exploded shortly after takeoff on an Alaska Airlines flight, exposing passengers to deafening winds at 16,000 feet. The pilots flying the plane landed it safely with no serious injuries reported. Experts say the event could have been catastrophic if it had occurred at higher altitudes as passengers moved around the cabin.

The National Transportation Safety Board said in a report last month that the plane appeared to have left a Boeing factory without the bolts needed to hold the panel, known as a door plug, in place. Door plugs are used to close gaps in the body of an aircraft where an emergency exit would have been installed if the aircraft had the maximum number of seats.

The incident followed two crashes of Max 8 jets in 2018 and 2019, which together killed almost 350 people. Aviation regulators grounded Max planes for nearly two years after those crashes. That crisis cost Boeing about $20 billion.

The acquisition of Spirit could allow Boeing to more easily change the supplier’s policies and manufacturing practices, something the company has been seeking from the outside for a few years. Quality and operations issues led to a leadership change at Spirit last fall. Patrick Shanahan, a former Boeing employee and senior Defense Department official, took over as CEO of Spirit.

“We believe that the reintegration of Boeing and Spirit AeroSystems manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees and shareholders,” Boeing said in a statement.

“While there can be no guarantee that we will be able to reach an agreement,” the company added, “we are committed to finding ways to ensure the safety and quality of the aircraft that millions of people depend on every day.” keep improving. .”

But buying Spirit could also saddle Boeing with more problems at more factories as regulators demand the company improve quality control at its own plants. The Federal Aviation Administration this week gave the company 90 days to come up with a plan to address the quality control problems.

Spirit and other companies that make aircraft body and wing components have faced significant challenges in recent years, said Kevin Michaels, director of consulting firm AeroDynamic Advisory.

“It’s kind of a failed market,” he says. “The largest aviation companies are losing large amounts of money.”

Boeing sold Spirit to an investment firm in 2005 as part of a campaign to cut costs and focus more on aircraft final assembly. That investment company, Onex, based in Toronto, later listed Spirit on the stock exchange. Spirit soon began earning consistent annual profits of hundreds of millions of dollars.

But the company suffered a setback in the early 2010s, after the financial crisis. Its fortunes improved in the middle of the decade, but Spirit and its peers have suffered recently in part as aircraft makers like Boeing and Airbus have pressured suppliers to cut costs even as jets have become more complicated, he said. Mr. Michaels.

Spirit also suffered a major blow when regulators grounded the Boeing 737 Max jets after the two crashes. Then, in early 2020, the pandemic disrupted supply chains, contributing to rising material costs. Over the past four years, Spirit has lost $2.5 billion.

Any deal between Boeing and Spirit will impact Airbus, Boeing’s main competitor in commercial aircraft, because Spirit makes parts for Airbus aircraft, at. Airbus, based in Toulouse, France, declined to comment Friday on whether it would acquire Spirit’s units that supply it with parts.

Spirit’s shares closed down about 15 percent on Friday after The Wall Street Journal and other news organizations reported that Boeing was in talks to acquire the supplier. Boeing shares fell about 2 percent.

Liz Alderman reporting contributed.